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Alcoa Inc says it will not match Rio Tinto's Alcan bid

US aluminum giant Alcoa Inc on Thursday dropped its hostile bid for Canadian rival Alcan Inc, saying it would not match a US$38.1 billion offer from Anglo-Australian miner Rio Tinto.

"Rio's offer for Alcan strongly reinforces our view of the underlying value in the aluminum industry and its bright prospects for the future," Alcoa chairman and chief executive Alain Belda said hours after Alcan agreed to a tie-up with Rio Tinto.

"However, at this price level, we have more attractive options for delivering additional value to shareholders," Belda said.

"We will continue to deliver strong results, make targeted growth investments, trim under-performing businesses and further enhance returns to shareholders by resuming our share repurchase program. That is a better path forward for our shareholders, our employees, and our communities," he said.

The announcement by Alcoa, which this week extended its US$33 billion bid, came hours after Rio Tinto launched its offer in a mammoth bid to create the world's largest aluminum company.

The Rio Tinto offer won the backing of Alcan management.

The deal would represent the biggest-ever acquisition in the fast-moving global mining and metals industry, analysts said.

As consolidation in the booming sector continues, Rio Tinto and Alcan said in a joint statement they would combine to form Rio Tinto Alcan, which would be based in Montreal.

The transaction, which remains subject to regulatory and shareholder approvals, was expected to be completed in the fourth quarter of this year.

Record metals prices have unleashed a wave of consolidation in the metals sector, as companies seek to snap each other up to benefit from the profits.
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