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On June 29, 2001, the world's second largest natural resource group was born, with the merger of Australia's BHP Limited and the London-headquartered Billiton PLC. Based on the closing share prices of BHP and Billiton on June 28, 2001, the new group would have an enterprise value of about $38 billion. The world's largest group is the U.S.-based Alcoa Corporation, with an enterprise value in excess of $40 billion.
Prior to the merger, BHP was recognized as the world's fourth largest resources group and Billiton as the seventh largest. Joined together they surged past their rival mining competitors Anglo American--De Beers' 45 percent shareholder--and Rio Tinto, to claim the number two spot.
Analysts noted that the news of the merger did not come as good news to Anglo American. First it has a historical connection to Billiton, which was a metamorphosis of Gencor, a company that was unbundled from Anglo in the 1950s. Also, prior to the merger, Anglo America felt that it had closed the gap on Rio Tinto, particularly after the privatization of De Beers and the ending of the cross shareholding with the diamond company.
Things could have worked out differently, since both Rio Tinto and Anglo American appeared to have designs on Billiton. BHP and Rio Tinto discussed a merger during 2000, but terms could not be agreed upon. Anglo American seemed to be taking a different route, when it bought up 7 percent of Billiton in a surprise …