Alcan in merger talks with Rio Tinto: reports

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Alcan Inc., the Montreal-based aluminum producer, is in talks that could lead to a merger agreement with mining giant Rio Tinto PLC, according to news reports Wednesday.

Rio Tinto has hired investment banker CIBC World Markets to assist in preparing a bid for Alcan, an apparent move to fend off a hostile bid by U.S. rival Alcoa Inc., The Globe and Mail reported, quoting sources.

Meanwhile, The Times of London reported that Rio Tinto is set to launch a $34-billion US bid for Alcan. The UK newspaper quoted Wall Street investment bankers as saying Rio Tinto would make a formal offer two weeks.

The newspaper said Rio Tinto had no comment on a possible bid.

An Alcan spokesperson in Montreal told Reuters that the company was “in negotiations with third parties,” but declined to identify them.

On Tuesday, Alcoa told the U.S. Securities and Exchange Commission that it had signed a $30-billion US credit facility with a syndicate of bank lenders that would be used to finance its hostile takeover of Alcan.

Alcoa’s filing with the SEC came a day after the company extended its $33-billion cash-and-stock offer for Alcan until Aug. 10.
The original offer, which has been rejected by Alcan’s board as too low and too complicated, expired Monday.

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