Shares in Rio Tinto Climb to New Highs on Rumors of Talks With Canadian Aluminum Group Alcan

Shares in Australia's Rio Tinto Ltd. shot to new highs Thursday on rumors the mining giant has begun talks with Canadian aluminum group Alcan Inc. on a friendly takeover deal that would challenge a hostile $28 billion bid by U.S. rival Alcoa. Rio Tinto shares rose 1.94 percent to A$104.76 at midday Thursday after hitting a new intraday high of A$105.19 in early trading, surpassing Tuesday's record of A$104.34. A Canadian newspaper on Wednesday quoted unidentified sources saying the Anglo-Australian mining group had hired investment bank CIBC World Markets to help it prepare a potential deal with Alcan. A spokesman for Rio Tinto, Ian Head, said the company would "not comment on market rumors and speculation" Alcan spokesman Bryan Tucker also declined to comment, but said the company is negotiating with multiple parties. Montreal-based Alcan said in a filing with the U.S. Securities and Exchange Commission that it has signed a confidentiality and standstill agreement with a bidder other than Alcoa. In a July 9 filing with the SEC, Alcan said it is "continuing to have discussions and has undertaken negotiations concerning potential strategic transactions and alternatives to the Alcoa offer." Alcan's board roundly rejected Alcoa's offer in May, calling it inadequate. Alcan has said it would consider a higher bid or perhaps turn the tables on Alcoa and try to buy it.