Rio Tinto Shares Weaken On Alcan Bid Report

Rio Tinto shares in London fell in the wake of a report that the world's secondlargest mining group plans to gatecrash a $28 billion hostile bid battle between the aluminum giants Alcan and Alcoa. The U.K. Daily Telegraph cited people close to the process as saying Rio Tinto, listed in London and Sydney, has engaged Credit Suisse Group andDeutsche Bank to advise it on a range of options, including a bid for Alcan. Another possibility is a bid for Alcoa, although this is thought less likely, the report says. "We don't comment on market speculation," Rio Tinto spokesman Nick Cobban said of the report. Alcan spokeswoman Anik Michaud also declined to comment. A London-based analyst at a major bank said that Rio Tinto could be looking to become an aluminum "heavyweight," but retaining low electricity costs for aluminum production would be a major challenge. Rio Tinto "would have to be comfortable that there would be no renegotiation of power supply agreements by local governments," he said. "You can see why they would be interested, but it's still a fairly hefty entry price, with (Alcan's) share price doubling over the last six months," he added.