Hong Kong: BHP Billiton, the world's largest mining company, abandoned its year-long hostile bid to acquire rival Rio Tinto on Tuesday, citing global downturn, turmoil in the financial markets and regulatory concerns in Europe as major reasons. If successful, the transaction would have been one of the largest ever at $66 billion. 

In February this year, BHP's formal offer of 3.4 shares for each Rio share, was worth over $140 billion.

BHP's offer of 3.4 shares for each share in London-based Rio Tinto, valued the smaller company at about $60 billion. A meltdown in markets across the world has depressed the original value of the deal.

Rio Tinto had rejected BHP's offer as inadequate.

Ina statement, Sydney, Australia-based BHP said it no longer believed "that completion of the offers for Rio Tinto would be in the best interests of BHP Billiton shareholders."

In a statement on Tuesday, Don Argus, BHP Billiton's chairman, said: "While 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, we have concerns about the continued deterioration of near term global economic conditions, the lack of any certainty as to the time it will take for conditions to improve and the risks that these issues imply for shareholder value."

In a statement filed with the Australian Securities Exchange, BHP Billiton said given the sharp drop in commodities prices and global economic turmoil, it was uncertain whether it would be able to derive fair value for assets that the European Commission wanted it to divest.

It was also doubtful if it could service the high levels of debt it would need to take on given an environment of tight credit and diminished cash flows.

BHP also said it would write off approximately $450 million in costs incurred in its pursuit of Rio Tinto since last November.

Demand for mineral resources has slumped with a global slowdown inmanufacturing and construction, including in key customer China.

A combination of Rio and Billiton would have created the largest iron ore producer in the world, a scaring prospect for steelmakers around the world, who worried that such a monolithic entity would have too much control over prices.

Chinese steelmakers were the most fearful with Aluminum Corp. of China, or Chinalco, picking up a stake in Rio in order to disrupt the proposed deal.