Feb. 13 -- Shares of Alumina Ltd. jumped after a report that its partner Alcoa Inc., the world's largest aluminum maker, may be the subject of takeover bids from BHP Billiton Ltd. and Rio Tinto Group.
Melbourne-based BHP and Rio have independently drawn up plans for a $40 billion takeover of Alcoa, the London-based Times said, citing unidentified people. Both BHP and Rio declined to comment on the report. Alumina owns 40 percent of the world's biggest alumina producer, a venture with Alcoa.
Demand for raw materials from China has driven record profits for BHP and Rio, who both said this month they are continuing to look at potential acquisitions. A five-year rally in metals spurred more than $157 billion of takeovers and merger proposals last year in the mining industry.
"Both BHP and Rio are well positioned from a capital perspective to make acquisitions," said Atul Lele, who helps manage $360 million at White Funds Management in Sydney, including BHP, Rio and Alumina stock. "Both companies should be interested in expanding and making aluminum a bigger part of their portfolio."
Shares of Melbourne-based Alumina rose as much as 57 cents, or 8.4 percent, to A$7.40 on the Australian Stock Exchange, and traded at A$7.23 at 12:52 p.m. Sydney time.
Shares of Alcoa rose to $35.81 at 7:28 p.m. in New York, up $2.91, or 8.8 percent, from a closing price of $32.90. The stock has risen 6.6 percent in the past year.
Alcoa doesn't "comment on rumors as a policy," company spokesman Kevin Lowery said over the phone from Pittsburgh. BHP "doesn't comment on market rumor or speculation," spokeswoman Emma Meade said today in Melbourne. "We don't comment on market rumors or speculation," Ian Head, a Rio spokesman said from Melbourne. Alumina Chief Executive Officer John Marlay declined to comment.
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