Life’s a plane for Klop­pers

BHP Bil­li­ton’s chief ex­ec­u­tive has played the merger game be­fore, and wants to win again

The Weekend Australian - Travel - - General Appointments -

DUR­ING 2001, Mar­ius Klop­pers spent more than 100 nights sleep­ing on air­craft, a gru­elling or­deal made nec­es­sary by his role in the in­te­gra­tion of BHP and Bil­li­ton that cre­ated the world’s largest min­ing com­pany. It was the kind of once-in-a-life­time marathon that would, you might think, be enough for any­body. Ap­par­ently not. The chief ex­ec­u­tive of BHP Bil­li­ton is at it again.

Last Novem­ber, Klop­pers launched a takeover bid for Rio Tinto, the min­ing in­dus­try’s No 2 - and he has been trav­el­ling al­most con­stantly since as he tries to woo share­hold­ers and pla­cate cus­tomers.

If the BHP Bil­li­ton ex­pe­ri­ence is any guide, then a suc­cess­ful bid for Rio will need Klop­pers to clock up even more flight time in 2008. If he was the kind of sin­gle-minded worka­holic for whom the rest of life fell a dis­tant sec­ond, then such a prospect would, per­haps, be un­der­stand­able. But Klop­pers is far from that.

He is, how­ever, a man of con­tra­dic­tions, an am­bi­tious busi­ness­man, a bril­liant PhD and a proven cor­po­rate preda­tor, yet also a de­voted fam­ily man (with three chil­dren, one adopted) and a veg­e­tar­ian whose most ex­pen­sive as­set un­til re­cently was a sim­ple fam­ily Nis­san.

When Chip Goodyear, the for­mer head of BHP, an­nounced his re­tire­ment last year, Klop­pers’s name was men­tioned as a pos­si­ble re­place­ment.

But there were other, ap­par­ently stronger, can­di­dates and the South African was con­sid­ered an out­sider. The BHP board is un­der­stood to have been wowed by the 44-yearold’s en­ergy and am­bi­tion, and he got the job.

That am­bi­tion man­i­fested it­self within months of Klop­pers tak­ing the helm as he launched the au­da­cious bid for Rio Tinto. If the deal is suc­cess­ful, it will be one of the largest takeovers in cor­po­rate his­tory and will cre­ate the big­gest com­pany in the UK — big­ger, even, than BP.

Bri­tain’s Takeover Panel has given BHP un­til Fe­bru­ary 6 to de­cide whether to make its approach for­mal, or to aban­don its bid. Given Klop­pers’s con­tra­dic­tory na­ture, it is dif­fi­cult to pre­dict whether BHP will dig in and go hos­tile, or walk away.

Most sources close to BHP be­lieve that he will not risk hu­mil­i­a­tion by walk­ing away, but nei­ther will he throw ev­ery­thing into a knock­out bid for Rio. The bat­tle could, there­fore, be a long one and there are likely to be many more sleep­less nights on planes.

Klop­pers en­tered the min­ing in­dus­try in the same year that Tom Al­banese, his ri­val, joined Rio Tinto. He is a chem­i­cal en­gi­neer by train­ing, but en­tered man­age­ment af­ter gain­ing a PhD from the highly re­spected Mas­sachusetts In­sti­tute of Tech­nol­ogy and an MBA from Insead, the grad­u­ate busi­ness school.

He worked for a short pe­riod with McKin­seys in the Nether­lands be­fore re­turn­ing to his na­tive South Africa to run an alu­minium smelter.

He be­came part of the cir­cle of brash young ex­ec­u­tives work­ing for Brian Gil­bert­son at South Africa’s Bil­li­ton, and was in­stru­men­tal in merg­ing the com­pany with BHP af­ter the 2001 deal.

‘‘ I grew up work­ing for a live-by-the-sword com­pany,’’ Klop­pers said of his time with Bil­li­ton. The bold­ness that he in­her­ited has im­pressed City bankers, who have rushed to pro­vide fund­ing for BHP’s bid.

How­ever, there are risks to liv­ing by the sword, as the old say­ing points out. For ex­am­ple, BHP’s bid for Rio has an­gered the Chi­nese, BHP’s largest cus­tomer. The au­thor­i­ties in Bei­jing are wor­ried that a joint BHPRio would con­trol 36 per cent of the world’s iron ore re­serves.

Vale, the Brazil­ian miner for­merly known as CVRD, con­trols an­other 38 per cent and China’s steel pro­duc­ers, who are help­ing to cre­ate the in­fra­struc­ture to sup­port the coun­try’s ex­traor­di­nar­ily rapid growth, fear that they will be hurt by a du­op­oly ca­pa­ble of dic­tat­ing prices.

Klop­pers’s move for Rio could back­fire, there­fore, if it forces the Chi­nese to take a block­ing stake in Rio. Al­ter­na­tively, the Chi­nese may de­mand lower prices for iron ore, po­ten­tially rob­bing share­hold­ers of a huge wind­fall from ris­ing prices. Then there is the op­por­tu­nity cost of a bid for Rio. BHP’s oil di­vi­sion is, at last, be­gin­ning to de­liver and there are voices within the BHP hi­er­ar­chy ar­gu­ing that the com­pany should in­stead in­vest its money in the pe­tro­leum sec­tor.

As the BHP-Rio saga pro­gresses the dif­fer­ence be­tween the two com­pa­nies and their chief ex­ec­u­tives may grow more pro­nounced. Al­banese mir­rors Rio in his un­der­stated thought­ful­ness, Klop­pers em­bod­ies BHP’s bolder, brasher cul­ture.

As Klop­pers keeps up his cam­paign, it seems un­likely that his op­po­site num­ber will give up with­out a gen­uine strug­gle. The Times

Bold: Mar­ius Klop­pers em­bod­ies BHP’s im­age abroad

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