Rio Tinto nets $2bn for Alcan packaging arm

Rio Tinto, the Anglo-Australian mining group, today took the next step in reducing its debts by setting up the sale of its Alcan packaging business to Amcor, an Australian packaging group, for $2 billion. The deal follows last month's sale of Alcan's US packaging businesses for $1.2 billion to Bemis, leaving Rio with only the company’s engineered products arm to offload. Rio Tinto bought Alcan in a battle with BHP Billiton two years ago at the height of the commodities boom. The takeover left it with $38 billion in debt just as earnings began to subside with demand for metals collapsing in the face of the spreading global slowdown. In June, Rio Tinto raised $15 billion through a rights issue, reducing its debt to $23.2 billion. It has also sold off $6.6 billion in assets over the past 18 months. Guy Elliott, chief financial officer of Rio Tinto, said: "We believe Amcor's offer is in the interests of all stakeholders. These businesses would be acquired by a leading player in the global packaging sector that is very well placed to enable ongoing success of the businesses...We believe the offer would deliver good value for Rio Tinto shareholders." Alcan packaging has about 14,000 staff at 80 locations in 28 countries, with pharmaceuticals, tobacco, European food and Asian food divisions. It turned over $4.1 billion last year. Amcor is financing its purchase by raising A$1.6 billion of new equity in a rights issue. “Following the acquisition, Amcor will be among the world’s largest packaging companies, with leading positions in flexible packaging, custom PET containers and folding cartons for tobacco packaging,” Amcor said in a statement. source:business.timesonline.co.uk