Mining giant Rio Tinto has offered to buy Canadian aluminum company Alcan Inc for US$38.1 billion, the companies said yesterday, in a friendly takeover that counters a hostile bid by US-based Alcoa Inc.
In a joint statement, Rio Tinto and Alcan said the Anglo-Australian miner was offering US$101 per share for Alcan in the all-cash deal that Alcan's board was recommending to shareholders.
The bid exceeds a US$28 billion offer from Alcoa that Alcan's board roundly rejected in May, calling it inadequate.
Rio Tinto is offering a 65.5 percent premium on Alcan's all-time highest closing share price, and an almost 33 percent premium on Alcoa' offer, the statement said.
Under the deal, a new company named Rio Tinto Alcan would be based in Montreal, Canada and would be "a new global leader in the aluminum industry with large, long life, low cost assets worldwide," the statement said.
Trading of Rio Tinto's shares were halted ahead of the decision, but had earlier soared to a new record price as rumors swirled that a deal on Alcan was imminent.
"This transaction combines two leading and complementary aluminum businesses and is a further step in Rio Tinto's strategy of creating shareholder value through investing in high quality, large scale, low cost and long life assets in attractive sectors," Rio Tinto chairman Paul Skinner said in the statement.
Alcan chairman Yves Fortier said the offer was "very attractive" and offered shareholders "the certainty of a clear path to completion."
"The agreed transaction with Rio Tinto is the outcome of a rigorous and thorough process conducted by the Alcan board," he said.
"It achieves all of our stated goals, providing clearly superior value to Alcan shareholders while remaining true to our core values and obligations," he said.
Beating out BHP
Rio Tinto's all-cash offer appears designed to get in ahead of BHP Billiton, the world's biggest miner, who many believe could yet throw its hat into the ring for Alcan, an analyst said.
"It's a one-stop shop for Rio to reinforce its position in the alumina business and stop its rivals, BHP and Alcoa, from strengthening their positions too," he said.
Earlier this week, Alcoa extended its offer for Alcan until August 10, calling itself the "natural partner" for the Canadian firm.
Record metals prices fueled by booming demand from China have unleashed a wave of consolidation in the metals sector, as companies seek to snap each other up to gain scale and win ever growing profits.