BHP, Rio Tinto set sights on Alcoa
Mining giants BHP Billiton Ltd and Rio Tinto Ltd have drawn up separate plans for a $40 billion takeover of US aluminum producer Alcoa Inc, the Times of London reported.
The report revived long simmering speculation that one or more of the world's international miners, cashed up on the back of rocketing metals prices, would swoop on Pittsburgh-based Alcoa.
A takeover would give either Rio or BHP immediate access to millions of tons of bauxite, alumina and aluminum production, and possibly prompt a break-up of one of the best-known US companies.
A worker inspects a roll of aluminum at the Alcoa Warrick Operations plant in Boonville, Indiana. |
The report comes just days after India's top aluminum producer, Hindalco Industries Ltd, agreed to acquire Novelis Inc in an all-cash deal that values the Canadian company at $3.5 billion.
"The big negative point on Alcoa is that it's got huge downstream elements to it, and that wouldn't be attractive," said Sydney-based Standard Bank analyst Richard Rossiter, referring to Alcoa's plants that make finished products such as rolled aluminium.
"The only thing that would make it would be if you dismembered it, but to what extent would dismembering it harm the business?"
Rio Tinto and BHP, which are listed in both Australia and London, refused to comment on the article, as did a spokesman for Alcoa, which has a market capitalization of about $28.5 billion.
A $40 billion takeover of Alcoa would dwarf CVRD of Brazil's recent acquisition of Canadian nickel miner Inco for C$19.35 billion ($15.5 billion).
Alcoa stock rose 38 cents, or 1.17 percent to close at $32.90 on the New York Stock Exchange on Monday.
In its report, the Times said BHP and Rio Tinto were each understood to have compiled feasibility studies for a bid, but were not thought to have as yet approached Alcoa's board.
Stocks in both companies were little changed in Australia.
As long ago as last July there was speculation of a takeover of Alcoa by either BHP or Rio Tinto, with analysts suggesting either company could easily fund such a move.
The Times also reported Alcoa was looking at its future and had drawn up a list of potential new chief executives, with BHP executives featuring prominently on it.
BHP was understood to have done the groundwork on a bid for Alcoa, while Rio had considered a bid, but was not thought to have progressed as far as BHP, according to the Times.
Agencies
(China Daily 02/14/2007 page16)
