Rio Tinto said to be eyeing Alcan/Alcoa deal

Rio Tinto , the world's second-biggest miner, is considering gate-crashing Alcoa Inc.'s $28.6 billion hostile bid for Alcan Inc. , sources familiar with the matter said on Friday. Rio has asked investment banks Credit Suisse and Deutsche Bank to advise it on a range of options, including a possible bid for Alcan, the sources said. A bid for Alcoa is also possible but less likely, they added. Rio declined to comment, as did Credit Suisse. A spokesman for Deutsche Bank could not be reached. "We've said that from the outset that we were in discussion with third parties," said Alcan spokeswoman Anik Michaud. She declined to identify the third parties. Michaud said Alcoa's bid remained inadequate as it was almost 14 percent below the current market price of Alcan's shares. Based on Alcoa's Friday morning share price, its cash and stock bid for Alcan was worth $75.78 a share. Alcan shares were up 84 cents at $85.94 on the New York Stock Exchange before midday on Friday and up 20 Canadian cents at C$90.02 on the Toronto Stock Exchange. Alcoa shares were up 46 cents at $41.81 in New York. Alcoa said on Friday that the U.S. Department of Justice antitrust investigators had asked it for additional information regarding its offer for Alcan. Alcoa said it had a detailed road map to resolve competition issues through targeted divestitures and was looking to obtain approval in each jurisdiction and complete the takeover by the end of this year. "We continue to believe that a combination of Alcoa and Alcan makes strong strategic sense," Alcoa Chief Executive Alain Belda said. Alcan expects Alcoa to extend the July 10 deadline on its offer. "We contend that, from the beginning, Alcoa has underestimated the substantive impediments to achieving the regulatory clearances," Michaud said. She added that Montreal-based Alcan is not bound by any timing considerations at this point on unveiling its strategy to counter the Alcoa offer. LARGE BAUXITE ASSETS Alcan is the world's third-largest maker of primary aluminum, behind Alcoa and Russia's UC RUSAL. An Alcoa-Alcan link-up, or an Alcan-Rio combination would top RUSAL. If Rio buys Alcan, it would have access to two of the world's largest sources of bauxite -- Rio's existing Weipa deposit and Alcan's Gove deposit, both in Australia. Bauxite is required to make alumina, then aluminum, for use in products ranging from drinks cans to airplanes. Earlier this week, Rio announced plans to invest $1.8 billion in expanding its alumina refining operations, which some analysts interpreted as a sign it would not bid for Alcan. Alcoa made its bid on May 7, about six months after the collapse of two years of merger talks with Alcan. The offer is $58.60 in cash and 0.4108 Alcoa shares for each Alcan share. BHP Billiton Ltd. Plc. , Norsk Hydro ASA , Companhia Vale do Rio Doce , RUSAL, Anglo American and Xstrata Plc. are also viewed by analysts as potential bidders for Alcan. Alcan, which split off from Alcoa in the 1920s because of antitrust concerns, is expected to unveil its own strategy in the coming weeks, which will indicate whether it wants to remain independent, find another suitor or reach a friendly deal with Alcoa.