BHP went for the spin instead of X2 offer

MICK Davis, former head of Xstrata, attempted a comeback this year by approaching BHP Billiton with an offer to buy a bundle of mines from the world's largest natural resources group

BHP Billiton rebuffed the bid from X2 Resources, Davis's new investment vehicle, and instead intends to spin off its unwanted assets into a new listed company.

It is not clear whether Davis was bidding for all the assets that BHP ended up including in the new company, which analysts believe could be worth about $14-billion.

Two people familiar with the talks said the sides met this year and Davis made an offer for all the assets BHP was looking to spin off.

They said that it was unclear why BHP decided to reject the bid, which may have been worth about $10-billion.

BHP, which declined to comment on X2 Resources, said it had considered a range of options, and decided a demerger was in the best interest of its shareholders.

X2 Resources also declined to comment.

The assets that BHP proposes to spin off include nickel, manganese and coal mines spread across a number of countries, including Australia and South Africa.

Davis is one of the most high-profile mining executives, having run Xstrata until Glencore bought it last year .

He also served as chief financial officer of Billiton, the mining company that in 2001 merged with BHP.

Davis launched X2 with $1-billion in funding from Hong Kong commodities company Noble Group and TPG Capital, the private equity firm. Further investment commitments were made by three sovereign wealth and pension funds, which are thought to include the Abu Dhabi Investment Council and Caisse de dépôt et placement du Québec.

This could take the total of the investment commitments secured by X2 Resources to more than $4.5-billion.

Davis is hoping to replicate his success in transforming Xstrata, a coal producer, into one of the world's largest mining companies.

X2 Resources is already ruling over dozens of potential acquisitions, but has yet to conclude a deal. - © TheFinancial Times, London