Rio Tinto, the world’s second-largest miner, is poised to launch a $34 billion (£17 billion) takeover of Alcan, the Canadian aluminium producer.
Alcan, having rebuffed an approach from its rival Alcoa, told the US Securities and Exchange Commission (SEC) yesterday that it was “undertaking negotiations” with other parties.
Sources close to Alcan have confirmed that this is Rio Tinto. The Anglo-Australian miner is believed to be preparing a $90-a-share offer, valuing Alcan at about $34 billion.
Alcan has rejected a hostile $73-a-share, or $28 billion, offer from Alcoa, the Pittsburgh-based company.
Wall Street bankers believe that the Rio offer is “ready to go hot” and predict a formal approach within two weeks.
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Rio Tinto has appointed Deutsche Bank to advise on the deal and is also understood to be working with CIBC in Canada. The company refused to comment last night.
In a filing with the SEC, Alcan confirmed for the first time that it is actively pursuing alternative offers. It said: “Alcan has a continuing process to build actively upon existing strategies to develop a full set of highest-value initiatives to explore alternatives consistent with the best interests of Alcan’s shareholders. Alcan has undertaken negotiations concerning potential strategic transactions and alternatives to the Alcoa Offer.”
Analysts believe that Alcan is courting Rio because it wants a white-knight bidder to block Alcoa. If Rio were to buy Alcan, it would significantly boost its aluminium assets at a time when the metal’s price is soaring.
The price of aluminium has risen 55 per cent in two years to more than $2,800 a tonne. Almost all of Alcan’s assets are in Canada. At present Rio, which reported a 43 per cent rise in profits last year to $7.4 billion, gets about 16 per cent of its revenues from aluminium.
Alcoa yesterday extended its offer for Alcan for a month until August 10.