Rio Tinto acquires Alcan

Alcan, the Canada-based aluminium company, is being acquired by Rio Tinto, for US$38.1bn.

The offer is above that made by Alcoa, the US group, which made a $27.5bn hostile bid for the group in May, following two years of negotiations aimed at a achieving a friendly merger.

The new aluminium product group will be based in Montreal and called Rio Tinto Alcan (RTA). It will be headed by Dick Evans, who is currently chief executive of Alcan and as part of the merger process, Alcan will sell its packaging division.

The newly created RTA will hold a strong position in the global aluminium industry, given that Rio Tinto has smelting operations in Australia, New Zealand and the UK, along with bauxite mines and alumina refineries in Australia and Sardinia.

The acquisition is expected to be earnings enhancing to Rio Tinto in the first full year and is in line with consolidation trends across global metals and mining sectors, which are experiencing the effects of high commodity prices and increased competition from emerging markets.

Some analysts believe the view that Rio Tinto needed to make a large acquisition to avoid becoming a takeover target and the group is clearly keen to further increase its aluminium business as it is planning a $1.8bn expansion of its Yarwun alumina refinery in Queensland, Australia.