Amcor runs eye over Rio assets

　　AMCOR admitted last night it was in talks to acquire part of Rio Tinto's unwanted Alcan packaging business after months of speculation. 　　Amcor, which bought Alcoa's packaging division for $3.1 billion in December 2007, has been cited as a logical buyer for the Alcan European food flexibles and tobacco business in light of the potential to increase its share of existing markets. 　　In response to a query from the stock exchange about a 14.6 per cent share price fall this week, Amcor said the discussions with Rio were "confidential and incomplete in nature" and it was unknown whether a deal would be reached. 　　In a move that will increase fears it is poised for an equity raising, Amcor said it would consider "all its funding options" in relation to such a deal. 　　It added, however, that it would not need an equity raising if it did not buy the Alcan packaging assets and noted there was no intention to underwrite its active dividend reinvestment plan. 　　A Macquarie Equities analyst, John Purtell, said last week it was possible Amcor would buy 30 per cent of the packaging business for $US850 million, funded by 25 per cent debt and 75 per cent equity. 　　But he noted there could be competition issues due to the combined market share of the Alcan and Amcor assets in certain markets, particularly Western Europe. 　　Alcan was attempting to offload its packaging business even before Rio bought the Canadian aluminium producer in late 2007. The division is "held for sale" on Rio's balance sheet and therefore does not contribute earnings, but there are fears of a write-down of its book value at the time of Rio's full-year results next week. 　　source：business.smh.com.au