Australia might have been bundled out of the rugby world cup by England last month but a BHP-Billiton takeover of London-based Rio Tinto would be wonderful piece of revenge for anyone with an interest in global Australian prestige.

It is an outrage that Rio Tinto has accumulated about $100 billion worth of Australian assets but does not deign to base itself in Australia.

As this recent video explained, Rio Tinto’s $US44 billion takeover of Canadian company Alcan made the company less Australian than it has ever been.

At that point, Rio was down to being just 15% Australian-owned with only three Australian-based directors out of 15, but this was before yesterday’s resignation of former DFAT secretary Ashton Calvert due to ill-health.

Analysts are already estimating synergies of up to $5 billion from a BHP-Rio merger and plenty of those would come from closing Rio Tinto’s extravagant London head office and running the entire $500 billion empire out of BHP-Billiton’s Lonsdale Street head office in Melbourne.

The departure of Coles to Perth means Melbourne is down to just three of Australia’s top 15 listed company headquarters, but it would be a huge coup to suddenly have one of the world’s three most valuable companies run from Bleak City.

The Australian splashed its later editions with news of a $400 billion merger, but the enterprise would actually be bigger than that. A story in Crikey on September 26 pointed out that the two companies were together capitalised at $407 billion then.

Rio Tinto shares hit a record high of $138.10 this morning, briefly giving it a market capitalisation in excess of $200 billion. By midday it was back to $131.74 – still up 16% or $26.6 billion in what amounts to the large one-day creation of value we’ve ever seen in an Australian-listed stock.

BHP-Billiton shares slipped 39c to $42.85 by midday, capitalisating the Big Australian at $240 billion, so with Rio at $191 billion the combined operation was worth $431 billion at midday. When you throw in debt and unexercised options, the enterprise value would exceed $500 billion.

Exxon Mobil is only capitalised at $US488 billion and even Russia’s Gazprom has come back to $US310 billion, so the world’s most valuable company now is clearly PetroChina which debuted this week briefly cracking the $US1 trillion mark before declining to $US800 billion after last night’s trading.

PetroChina raised $US8.94 billion selling 14% of its shares after receiving a staggering $US441 billon in applications. In this age of China power and sovereign wealth, it is amazing that applications for a Communist-controlled Chinese resources float exceeded the combined value of BHP and Rio – the two most valuable western resource houses.