Mining giant Rio Tinto has offered to buy Canadian aluminum company Alcan Inc. for $38.1 billion in cash in a friendly takeover that counters a hostile bid by U.S.-based Alcoa. The bid exceeds a $28 billion offer of cash and stock from Alcoa that Alcan’s board rejected in May. In a joint statement, Rio Tinto and Alcan said that Alcan’s board was recommending the deal to shareholders.
Under the deal, a new company named Rio Tinto Alcan would be based in Montreal. Rio Tinto said Alcan has high-quality, low-cost assets and excellent access to long-life hydro power, but that the packaging division will be sold off as it does not fit with the Anglo-Australian company's focus on mining and metals. Rio Tinto already has a major bauxite operation in Australia, as does Alcan, which would give the combined company a powerful hold over one of the key materials in aluminum production.