Alcan says lined up bidders for packaging assets

Alcan Inc. said on Thursday it already has prospective bidders for its packaging assets, which Rio Tinto plans to sell as part of its $38.1 billion friendly takeover bid for the Canadian aluminum maker. "We have several people who have provided indicative values to us," Dick Evans, president and chief executive of Alcan, told Reuters in an interview. Evans said Alcan had been very near a decision on selling its packaging group, which in based in Paris and has annual revenues of $6 billion, before Alcoa Inc. made its hostile $28.8 billion offer for Alcan on May 7. Analysts have long speculated that Alcan might sell the business, which makes specialty packaging for food, pharmaceutical, cosmetics and tobacco products, but the company had insisted that it remained a core asset. Alcoa had plans to sell its own packaging assets, which had 2006 annual sales of $3.2 billion, before it bid for Alcan. Rio Tinto is offering Alcan shareholders $101 a share in cash. Alcan had previously rejected Alcoa's cash and stock offer, which amounted to about $76 a share. Evans said a combination of Alcoa and Alcan would have had "baggage" in the form of antitrust issues that would "eat away" at the $1 billion of annual operating savings the U.S. company projected for such a union. Evans said Alcan had gone through a rigorous process to find the best offer for the company and that Rio Tinto's all-cash offer and the prospects for completing that transaction trumped anything else. He declined to identify other suitors, but said Alcan had signed more than two confidentiality agreements. Evans also confirmed that Alcan had considered trying to remain independent or even taking a run at Alcoa. "We looked at stand-alone -- you know, recapitalizing the company, leveraging it up, divesting certain assets," he told reporters. "We looked at a Pac-Man strategy. We looked at non-control transactions and we looked a number of control transactions." Evans said that before Alcoa's hostile offer, Alcan and Rio Tinto had not had merger talks, but had discussed business combinations not involving a change of control and in which the two companies could find cost savings in Australia, where they both have key bauxite assets. Rio Tinto Chief Executive Tom Albanese said the companies had been in talks "on and off" for some time but only recently had been able to come to an agreement. An all-cash offer was seen as the best alternative in an "intensely competitive" bid process, he said. "It is all cash because we've looked at what shareholders want -- they want the certainty of all cash." Evans, 59, will become chief executive of the combined company's aluminum group, which will be called Rio Tinto Alcan and based in Montreal. Albanese said the chief financial officer of Rio Tinto Alcan will likely come from Rio Tinto's executive ranks. Bauxite assets will be managed from Australia. Albanese said global greenfield and expansion projects in smelting at Rio Tinto and Alcan were complementary and he expressed support for Alcan's expansion plans in Canada.