Ghana: Alcoa Faces Competition for Takeover of Alcan

Alcoa might face competition for its $26.9 billion (R185 billion) bid for rival Alcan from mining companies such as BHP Billiton and Rio Tinto Group, Credit Suisse Group said Tuesday..

Alcoa could also become a target, said Credit Suisse analysts led by David Gagliano, in a report released on Monday. Potential bidders included Anglo American, Companhia Vale do Rio Doce (CVRD), Norilsk Nickel and Teck Cominco.
 
A five-year rally in metal prices has sparked 473 deals or bids in the industry this year, valued at $55.4 billion, according to Bloomberg data.

The analysts said: "With what will likely be an extensive antitrust review period, other interested parties will have plenty of time to do their work on both companies." No comment could be obtained from BHP Billiton, Rio Tinto, CVRD or Teck Cominco.

Merrill Lynch said last week that BHP Billiton might be an attractive takeover target for private equity companies. Citigroup said BHP could afford a bid for Rio Tinto.

Alcoa and Alcan's alumina and aluminium businesses would be attractive to mining companies, while their packaging and rolling units would lure non-mining companies, Credit Suisse said.

The firms' combination would control about 25 percent of the alumina and aluminium markets, it added. The new firm would have twice the capacity of United Company Rusal, which completed a three-way merger in March.

Alcoa and Alcan have been losing market share to producers in Russia and China as aluminium prices doubled in the past four years.
 
The Times of London said in February that BHP Billiton and Rio Tinto might be planning bids for Alcoa.

Ken Dean, the chief financial officer of Melbourne-based Alumina, said yesterday that a successful Alcoa bid for Alcan could "deliver significant benefits" to the Alcoa World Alumina and Chemicals joint venture between Alumina and Alcoa. The venture was the "exclusive vehicle" for the companies' bauxite and alumina businesses, and Alcan had stakes in a number of bauxite and alumina assets, he added.

Alumina owns 40 percent of the venture, Alcoa 60 percent.