Alcan begins merger talks with Rio Tinto

TORONTO - Aluminium producer Alcan Inc. has begun negotiating toward a merger agreement with Rio Tinto Plc to fend off a hostile bid from U.S. rival Alcoa Inc. , a Canadian newspaper said on Wednesday. The Globe and Mail, citing sources, said global mining company Rio Tinto hired investment banker CIBC World Markets recently to help it prepare a bid for Alcan. Britain's Times newspaper also reported that Rio was poised to launch a $34 billion (17 billion pound) takeover of Alcan, saying that Wall Street investment bankers believe the rival offer "is ready to go hot" with a formal approach within two weeks. An Alcan spokeswoman could not immediately be reached for comment. A Rio spokesman in London had no comment. Alcan said last week that the $28.6 billion hostile offer from Alcoa remains inadequate and it is pursuing alternatives such as talks with other groups. However, Alcoa said on Monday it extended its $28.6 billion offer for Alcan by a month.