BHP Billiton announced last week that it would launch a formal offer for Rio Tinto, of 3,4 of its shares for every Rio share.
However, Rio Tinto urged investors to take no action on the bid, which chairperson Paul Skinner said “significantly undervalued Rio Tinto and its prospects”.
The combination would position the combined company to meet the demands of customers, including in China and India, Argus said in a letter to shareholders on Tuesday.
“We have been patient and disciplined to date and will continue to be so,” he added.
BHP Billiton's offer requires acceptance from more than 50% of Rio Tinto shareholders, and the company must secure regulatory approvals for the deal in several jurisdictions before it can send out offer documents.