BHP coup improves bid prospects

Tonight it will confirm his key executive position and, whatever might have been contemplated last April, the appointment has taken on new meaning in the light of the bid for Rio Tinto. Sir John was the British permanent representative to the European Union and was replaced by Kim Darroch, Tony Blair's former EU adviser.

If BHP tried a hostile bid for Rio Tinto the European Competition authority would almost certainly block it. Even a friendly bid with a joint approach would run the gauntlet of any European steel maker who did not like the merger. The authority often holds bids up for 12 months. To work through these problems BHP needed an expert. It could not have done better than John Grant and his appointment enhances the chance of a deal being done. On the Rio Tinto board a number of directors have had nasty experiences with the competition authority in other companies, and they are fearful that a 12-month delay might interfere with the enormous task of integrating Alcan and pruning Rio assets.

But if the BHP price is right and the negotiations sort out which assets need to be disposed of, then the competition authority will not stop a deal being done. But the price must be right.