Alcan in merger talks with Rio Tinto, say reports

Mumbai: Canadian aluminium major Alcan Inc. has started merger negotiations with the world''s third largest mining company, Rio Tinto Plc, to fend off a $28-billion hostile bid from US rival Alcoa Inc., Canadian newspaper reports said.

>A combination of the North American aluminum powerhouses would create the world''s No. 1 producer of aluminium, eclipsing Russia''s UC Rusal.

Rio Tinto, UK''s Times newspaper said, was poised to launch a $34-billion takeover of Alcan, adding that Wall Street bankers believe the rival offer "is ready to go hot" with a formal approach within two weeks.

While Alcan declined to comment specifically on any talks, it did indicate that efforts to find a friendly suitor have intensified in recent weeks.

Alcan also said in a filing with securities regulators, it "has undertaken negotiations concerning potential strategic transactions and alternatives to the Alcoa offer." This marked a change in Alcan''s May disclosure that it was in "discussions with third parties."

Sources also said Rio Tinto had hired investment bank CIBC World Markets Corp. over the weekend to help it prepare a potential transaction with Alcan.

Rio Tinto already has a major bauxite operation in Australia, as does Alcan, which would give the combined company a powerful hold in aluminum production. The diversified miner is currently the world''s eighth-largest aluminum maker, producing roughly 820,000 tonnes of aluminum products a year.