Alcoa, Alcan Takeover Speculation On Rise

Alcoa refused to raise its $27.62 billion hostile bid for rival Alcan, but investors continued to bet a bigger payout is in the works.

Analysts and investors said they expect Alcoa’s effort will lead to rival bids for either company from global mining giants, particularly BHP Billiton and Rio Tinto PLC.

Much of the speculation about a white knight for Alcan centered on BHP Billiton, the largest mining company in the world by market capitalization. BHP hasn’t commented on Alcan rumors, but its executives have said recently that they are interested “in the upstream part of the value chain where sustainable supplies of low cost bauxite and power are key considerations,” according to a BHP spokeswoman. Alcan has low-cost power, while Alcoa has low-cost bauxite, which is used to make aluminum.

Representatives at Brazil’s Companhia Vale do Rio Doce, or CVRD, and Britian’s Rio Tinto each declined to comment on rumors that their companies could be interested in Alcoa or Alcan. London-based Anglo American couldn’t be reached for comment.