Discussion on the premium that BHP may have to pay to acquire Rio Tinto.

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....BHP Billiton Ltd. dropped for a second day after Perennial Investment Partners Ltd. said the world's largest mining company may need to offer a 60 percent premium to the pre-takeover bid price for its offer to buy Rio Tinto Group to be accepted. Shares of Rio jumped to a record.

.... BHP, which says it will pursue a takeover of Rio Tinto after the rival rejected its initial proposal, slid 1.2 percent to A$41.97. The company may need to offer a 60 percent premium to buy Rio, Ken West, who helps manage $18 billion, including Rio shares, at Perennial Investment Partners Ltd. in Melbourne, said in a television interview with Australian Broadcasting Corp. on Nov. 11.

Rio Tinto won't consider any bid below 70 pounds ($146) a share, the Sunday Times of London said yesterday, citing unidentified people close to the third-largest mining company. That's a 61 percent premium to the stock's price before Melbourne-based BHP said Nov. 8 Rio had rejected an indicative three-for-one share offer.

``People are concerned at the risk BHP may have to pay a premium and that they may have to inject cash into their bid,'' said Angus Gluskie, who helps manage the equivalent of $500 million at White Funds Management in Sydney. ``There's a broad theme of concern across the market and investors are focusing on paring risk.''