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Rio Tinto ahead in Alcan stakes.

Rio Tinto and Alcan have reached an agreement for London-based Rio Tinto to make an offer to acquire all of Alcan for $38.1 billion. The offer represents a premium of 65.5 percent to Alcan's all time high closing share price.

The combined aluminum product group, to be named Rio Tinto Alcan, will have significant bauxite reserves, alumina refining, hydro power and smelter technology.

The offer has been recommended for acceptance by the management and board of Montreal-based Alcan, unlike an earlier offer by Pittsburgh-based Alcoa that was meeting resistance.

"This transaction combines two leading and complementary aluminum businesses and is a further step in Rio Tinto's strategy of creating shareholder value through investing in high quality, large scale, low cost and long life assets in attractive sectors," says Rio Tinto Chairman Paul Skinner.

After completing the acquisition, Rio Tinto Alcan will be the largest global producer of aluminum and bauxite, based on current production, according to a Rio Tinto news release.

The merger plan calls for the companies to create a new global aluminum division called Rio Tinto Alcan, which would be based in Montreal and led by Alcan's current CEO Dick Evans.

As part of the merger, the Alcan Packaging business will be divested. That division makes products for several consumer sectors, including the beverage, food, pharmaceutical and consumer health markets.

"Alcan Packaging will have better opportunities for development and success following its divestiture and well will ensure a smooth transition for all involved," says Alcan's Evans.
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Title Annotation:NONFERROUS
Publication:Recycling Today
Date:Aug 1, 2007
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