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MORE MERGER MONEY- Rio Tinto values Alcan at $101/share or $38.1 billion

MONTREAL and LONDON - Executives at ALCAN must be breathing a little easier now that RIO TINTO has made an all-cash...


MONTREAL and LONDON – Executives at ALCAN must be breathing a little easier now that RIO TINTO has made an all-cash takeover bid for the Canadian company. Rio Tinto is offering US$101 per Alcan share, an offer that values the Canadian aluminum maker at US$38.1 billion. Rio Tinto made its offer early on July 12 in London, U.K., and the Alcan board is unanimous in recommending its acceptance by shareholders.

The new offer is much higher than the US$73.25 per Alcan share (in combined Alcoa shares and cash) that New York-based ALCOA offered in early May. Alcan has been resisting the Alcoa offer and seeking a white knight. It appears Rio Tinto has come to Alcans rescue. Analysts say Alcoa is unlikely to beat Rio Tintos offer.

The combined business will be called RIO TINTO ALCAN. It is to be headquartered in Montreal and led by current Alcan CEO Dick Evans. Evans will report directly to Rio Tintos CEO, Tom Albanese. Key positions in Rio Tinto Alcan will be filled by people from both organizations. Rio Tinto will add three new members to the board of Rio Tinto Alcan and seek a secondary listing for Rio Tinto plc on the Toronto Stock Exchange.

Rio Tinto says that Alcan is an excellent fit with its overall asset portfolio, strategy and value focus. Alcans upstream assets, low-cost position, technology and hydroelectricity assets are said to complement Rio Tintos existing energy and climate change strategy, based on the need to reduce carbon emissions. The two companies already share a strong commitment to sustainable development, employee health and safety, environmental stewardship, and positive engagement with local communities.

Rio Tinto says it will establish the RIO TINTO ALCAN FOUNDATION in Canada, which will have an endowment of Cdn$200 million built-up over a five-year period. It will replace Alcans existing practice of donating 1% of pre-tax profits to community, educational, cultural and charitable commitments.

Readers not familiar with the scope of Rio Tintos operations and aluminum sector should visit www.RioTinto.com.


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