The world's biggest miner BHP Billiton announced Tuesday it was dropping its controversial hostile takeover bid for rival Rio Tinto due to the state of the global economy.
The massive offer, which would have created a global mining behemoth, had raised concerns from steelmakers that the new company would have too much control over commodity prices.
Rio Tinto repeatedly rejected the offer as too low before the financial crisis had fully kicked in, and BHP chief executive Marius Kloppers said Tuesday that it was now off the table.
"The greater debt exposure of the combination plus the difficulty of divesting assets have increased the risks to shareholder value to an unacceptable level," he said in a statement.
Chairman Don Argus said the company was concerned about the "deterioration of near-term economic conditions" but insisted that the tie-up still made sense.
"We have not changed our view of the basic industrial logic of the combination, or of the longer term prospects for natural resource demand growth driven by emerging economies," he said in a statement.
BHP Billiton increased its to offer to 3.4 of its own shares for every Rio Tinto share in February, effectively valuing Rio, the world's third-biggest miner, at 147.4 billion dollars at the time the offer was made.