BHP and bid target Alcan tipped to be talking

BHP Billiton has been named as a likely counter-bidder for Alcan after the Canadian aluminium group rejected a hostile $US28.4 billion ($A34.6 billion) takeover bid from Alcoa, with a feisty Alcan confirming it was in "ongoing discussions with other third parties".

Speculation that BHP was looking to cut itself into what is shaping up as the great North American aluminium war escalated after Toronto's Globe and Mail reported that "people familiar with the matter" had said Alcan was in early-stage discussions with BHP.

BHP does not comment on market speculation but comments by its chief executive, Chip Goodyear, in Perth yesterday fuelled talk in the local market that if BHP was not about to move on Alcan it was because it had its eye on a bigger prize — Rio Tinto.

Speaking at The West Australian's Leadership Matters breakfast in Perth, Mr Goodyear fanned ongoing speculation that the mining giant was mulling a possible $US110 billion takeover bid for Rio, declaring that it was his "job" to consider such opportunities. Though he declined to comment on Rio specifically, he said the company looked at every possible opportunity.

"We always look at acquisition opportunities, we trade them off against our own opportunities inside, and we look at everything you think about and many things you don't," he said.

"We can't comment on specifics but we do look at everything and determine, 'does it make good sense for BHP Billiton?' Whether that's Rio Tinto or anyone else out there, it's our job to do that to create opportunity.

"We can be opportunistic … and we can move very quickly, but we have to understand why we're doing it."

BHP has not made a major acquisition since its $9.2 billion takeover of WMC Resources in 2005, but Mr Goodyear said the company had the capacity to strike quickly once it decided an acquisition was worthwhile.

Rio shares rose $1.90 to $94.50 in response. The rise for Rio was despite the 5 per cent fall to $23.80 in the share price of the group's uranium subsidiary, Energy Resources of Australia, after traditional owners said they were not consenting to development of the Jabiluka deposit.

Meanwhile, Alcan told its shareholders that Alcoa's hostile bid did not adequately reflect the value of the group, nor did it offer an appropriate control premium.

Alcan said its response would be to embark on an offensive strategy of seeking alternatives that created shareholder value.

There have been suggestions that Alcan could turn the tables and make a hostile bid for the poorly performed Alcoa.

In the dust-up that has followed Alcoa's bid, it has emerged that Alcoa has been stalking its Canadian competitor for two years. Alcoa's decision to go hostile is widely seen as a reaction to speculation that it could become the target of a takeover offer, if not from the likes of BHP and Rio, then from private equity.

The reporter owns BHP shares.