Alcan tip for Rio

SPECULATION is mounting in London investment circles that global miner Rio Tinto is set to pitch a takeover bid for Canadian aluminium company Alcan. Several British newspapers reported on Friday that Rio had asked investment banks Credit Suisse and Deutsche Bank to advise it on a range of options, including a possible bid for Alcan. Alcan confirmed on Friday that it was talking to third parties after rejecting a $US28.6 billion (A$33.3 billion) takeover offer from US-based Alcoa. "We've said from the outset that we were in discussions with third parties," said Alcan spokeswoman Anik Michaud. Ms Michaud refused to identify the third parties, but noted that Alcan's shares were trading on Friday almost 14 per cent above the Alcoa bid. Rio's Australian spokesman Ian Head refused to comment on the reports. Alcan is the world's third largest maker of primary aluminium, behind Alcoa and Russia's Rusal. If Rio bought Alcan, it would have access to two of the world's largest sources of bauxite -- Rio's existing Weipa deposit and Alcan's Gove deposit, both in Australia. Bauxite is required to make alumina, then aluminium, for use in products ranging from drinks cans to aircraft. Last week Rio announced plans to invest $1.8 billion in expanding its alumina refining operations, which some analysts interpreted as a sign it would not bid for Alcan. Alcoa made its bid on May 7, about six months after the collapse of two years of merger talks with Alcan. BHP Billiton, Anglo American and Xstrata are also viewed as potential bidders for Alcan.