Rio Tinto makes a recommended all cash offer for Alcan

Rio Tinto and Alcan have reached an agreement for Rio Tinto to make an offer to....

  Rio Tinto and Alcan have reached an agreement for Rio Tinto to make an offer to acquire all of Alcan’s outstanding common shares for US$101 per common share in a recommended, all cash transaction. The offer represents a total equity consideration for Alcan of approximately US$38.1 billion.The offer represents a premium of 65.5 percent to Alcan’s all time high closing share price of US$61.03 in May this year, prior to the Alcoa offer. It also represents a premium of 32.8 percent to the value of Alcoa’s current offer of US$76.03, based on Alcoa’s closing share price on July 11, 2007. The combined aluminium product group, to be named Rio Tinto Alcan, will be a new global leader in the aluminium industry with large, long life, low cost assets worldwide. The combined group’s access to significant bauxite reserves, competitive alumina refining, low cost hydro power and leading smelter technology provides an excellent position to capitalise on the favourable demand fundamentals of the aluminium industry. Rio Tinto Alcan will also have a strong portfolio of growth projects. Rio Tinto Chairman Paul Skinner said the transaction combined two leading and complementary aluminium businesses, with Alcan to complement Rio’s existing operational portfolio.“It also adds to our significant presence in Québec and Canada, where we have long standing operations in QIT-Fer et Titane, Iron Ore Company of Canada and Diavik Diamond Mines,” Mr Skinner said. He said the enlarged aluminium product group, Rio Tinto Alcan, would be headquartered in Montréal and led by the current Alcan chief executive officer, Dick Evans.The transaction is expected to create a new global aluminium industry leader in bauxite, alumina, power, aluminium and technology - with a strong pipeline of attractive growth projects for the future. Rio Tinto Alcan would be the largest global producer of aluminium and bauxite, based on current production, with a defined pathway through the commissioning of Gove and the committed expansion of Yarwun to becoming the largest producer of alumina.The acquisition of Alcan will position Rio Tinto to capitalise on the strong demand fundamentals of the aluminium sector. Alcan Chairman, Yves Fortier said the agreed transaction with Rio Tinto was the outcome of a rigorous and thorough process conducted by the Alcan board. “It achieves all of our stated goals, providing clearly superior value to Alcan shareholders while remaining true to our core values and obligations as responsible corporate citizens,” Mr Fortier said. “Importantly, Rio Tinto has agreed to meet Alcan’s existing business and social commitments to Québec and Canada and the Alcan board has therefore determined that the offer meets the terms of our Continuity Agreement with the Government of Québec.” Rio Tinto chief executive, Tom Albanese said the transaction would be value enhancing to shareholders, and that the company expects it to be earnings and cash flow per share accretive to Rio Tinto in the first full year. “Rio Tinto intends to retain its focus on mining and metals activities by the divestment of Alcan’s Packaging division, as jointly agreed with Alcan. “The Engineered Products division will be retained with a focus on managing the portfolio for optimum value,” Mr Albanese said.