Alcan Senior Executives to Leave After Rio Tinto Deal

Oct. 11 -- Alcan Inc., the world's third- largest aluminum company, said its two most senior executives after Chief Executive Officer Dick Evans probably will leave following the $38.1 billion takeover by Rio Tinto Group. Chief Financial Officer Michael Hanley and Michel Jacques, head of Primary Metals, likely will "seek employment outside of Rio Tinto Alcan," Alcan spokesman Michael Kuhn said by phone today from the company's headquarters in Montreal. The men will stay on for an unspecified period to ensure a "smooth transition," he said. Rio expects to complete the deal in the fourth quarter. The London-based company is acquiring Alcan to overtake United Co. Rusal as the world's largest aluminum producer and benefit from rising demand from airplane makers and countries led by China. Rio's bid trumped a hostile $27.7 billion offer from Alcoa Inc. Primary Metals, Alcan's largest division, will be folded into the new Rio Tinto Alcan unit, along with some mining assets and its engineered-products division. Evans will lead Rio Tinto Alcan, Rio said yesterday. Rio's Phillip Strachan will become the unit's CFO, and Jacques will be replaced by Jacynthe Cote, now head of the bauxite and alumina business at Alcan. Rio Tinto Alcan will be based in Montreal, and Steve Hodgson will replace Cote as head of the bauxite and alumina business, based in Queensland, Australia. Christel Bories will lead the Paris-based engineered-products division, which includes aerospace and specialty-sheet products. Rio Review That division will "be subject to the portfolio review of all Rio Tinto's businesses, which aims to identify which businesses to retain and which to divest," Rio said yesterday in a filing. Rio may sell more than $10 billion in assets to help finance the Alcan purchase and maintain its credit rating, Chief Financial Officer Guy Elliott said July 12. The deal will increase Rio's debt-to-equity ratio to 64 percent, he said. Standard & Poor's rates Rio Tinto's long-term debt A+. "Rio Tinto is a miner," said Scott Burns, an analyst at Morningstar Inc. in Chicago. "If something has more value outside of the portfolio it makes sense to set it free." Ilene Gordon will head Alcan's packaging business until it is sold as part of Rio Tinto's plan to cut debt. Alcan shares fell 51 cents, or 0.5 percent, to C$97.99 at 4:15 p.m. in Toronto Stock Exchange trading. Rio rose 155 pence, or 3.5 percent, to 4,563 pence in London.