mining group Rio Tinto Plc, the world''s third largest mining company, has agreed
to buy Canadian aluminium group Alcan Inc for $38.1 billion at $101 for each Alcan
company will be called Rio Tinto and have its headquarters in London. The group''s
aluminium business, however, will carry the name Rio Tinto Alcan, with headquarters
current chief executive Dick Evans will lead the combined group, which will create
the world''s No.1 producer of aluminium, eclipsing Russia''s UC Rusal. Last October,
a three-way merger between Russian firms Rusal and Sual and Swiss company Glencore
left Alcoa as the world''s second largest aluminium producer.
price represents a premium of 65.5 per cent to Alcan''s all-time high closing share
price of $61.03 on 4 May, before US miner Alcoa''s $27-billion bid afte almost
two years of talks. (See: Alcoa makes unsolicited
$26.9 billion offer for Alcan)
being rebuffed by the Alcan board on the grounds that it undervalued the firm,
Alcoa announced a hostile bid taking a slightly improved offer of $28 billion
to Alcan''s shareholders.
anxiety for a merger stemmed from being under pressure to either acquire or risk
being taken over by a larger rival like Rio Tinto or BHP Billiton. A merger with
Alcan would enable Alcoa to fend off the threat of being acquired.
Canadian miner began a search for a white knight to stay out of Alcoa''s embrace
and started exploring a merger with other mining companies. In early July reports
quoting sources said Alcan had signed confidentiality agreements with at least
two potential suitors who "are actively looking" at the company.
rumoured bidders for Alcan were BHP Billiton PLC, Rio Tinto PLC, and Companhia
Vale do Rio Doce of Brazil, with Rio Tinto being quoted as working on a $34-billion
plan. (See: Alcan in merger talks with Rio
Tinto, say reports)
Albanese, chief executive, Rio Tinto, said, "This transaction will enable
Rio Tinto''s shareholders to benefit from the favourable demand fundamentals of
the aluminium sector and the synergies and enhanced development opportunities
which the combination of our businesses will deliver."
the announcement, shares in Rio Tinto on the Australian exchange (it is listed
on both the London and Australian stock exchanges) surged to record highs amid
speculation that the world''s second-largest mining firm was going to confirm the
friendly takeover deal.
shares peaked at an all-time high of A$105.19 before trading in its shares in
Australia was halted pending the announcement.