White knights emerge for $30bn Alcan

Rio Tinto has reportedly hired Deutsche Bank to advise it on a possible bid for Canadian aluminum producer Alcan, while Norway's petrochemical giant Norsk Hydro is also said to be planning a bid.

Alcan rejected a $28.4 billion bid by US aluminium rival Alcoa last week as too low, including debt the bid would have been worth some $33 billion.

There was speculation last week BHP Billiton had begun talks with Alcan about a merger that would fend off Alcoa.

Today the Sydney Morning Herald reported that Rio Tinto has hired Deutsche to advise on a counter bid, although a spokesman for Rio Tinto refused to comment to Times Online.

If Rio were to bid it would probably sell on Alcan’s downstream aluminum rolling and packaging arms, worth some $8 billion, to venture capital partners, making the deal more affordable, since it has the capacity to borrown some $20 billion.

Separately, Canada’s Globe and Mail newspaper, citing a banker close to Alcan, said today that Norway’s Norsk Hydro was also gearing up for a run at Alcan.

BHP Billiton, Companhia Vale do Rio Doce, United Company Rusal, Anglo American and Xstrata are also seen as potential bidders.

The Norwegian government owns a sizeable minority stake in Hydro.

In Australia, Alcan and Rio are equal 40-40 partners in the world’s biggest alumina refinery - Queensland Alumina.