BHP Billiton Bid For Alcan More Likely Than Alcoa

A BHP Billiton takeover offer for Canada's Alcan cannot be ruled out but won't be imminent, analysts said, noting that a bid for the larger Alcoa which has more downstream operations is less likely.

Alcan is looking for a white knight to fend off a $27 billion hostile bid from rival aluminum giant Alcoa, and is reported to have opened its data room to BHP Billiton and Rio Tinto.

Citing an unidentified source, the Sydney Morning Herald reported Wednesday that the Anglo-Australian miners are among those being considered by Alcan for the role of the white knight but the process is still in early stages.

The Times of London earlier reported that BHP Billiton is running the ruler over Alcoa and mulling a hostile US$40 billion takeover bid.

UBS analyst Glyn Lawcock said if BHP and Rio have been given access to Alcan's data room there is a chance they could make offers, but any bids are likely to be some time off.

"If the data room stacks up and they can find private equity who are prepared to pay them a reasonable price for the downstream assets then there is every possibility that they would have a go, but there is no rush," he said.

"Alcoa is going to be tied up with antitrust getting through regulatory hurdles for a number of months so there is no real need to move quickly, but it makes perfect sense to go have a look."

Lawcock said the Anglo-Australian miners are more likely to launch bids for Alcan than for Alcoa.

Along with their bauxite mines, alumina refineries and aluminum smelters, both Alcoa and Alcan have large downstream manufacturing businesses supplying automotive, building and packaging products.

Analysts said these assets are of little interest to either BHP or Rio while Alcoa has more downstream assets that would need to be sold off.

"The Alcan deal is easier," Lawcock said. "You get a good look at the data room so you know what you are buying rather than going hostile for Alcoa where you also have a lot more downstream."

Alcoa's move on Alcan has raised competition issues but a bid from BHP or Rio for either Alcoa or Alcan would be unlikely to face competition barriers as the two miners are smaller players in the aluminum sector, ABN Amro analyst Rob Clifford said.