Alcan counterbid talk centers on Rio, Norsk Hydro

OSLO/KUALA LUMPUR Tue May 29, 2007 6:54am EDT

The logo of Canadian aluminium group Alcan is seen at the entrance of the company's headquarters in Paris June 24, 2005. Norwegian aluminum group Norsk Hydro and global miner Rio Tinto declined to confirm or deny reports that they may place separate bids for Canada's Alcan. REUTERS/Charles Platiau

The logo of Canadian aluminium group Alcan is seen at the entrance of the company's headquarters in Paris June 24, 2005. Norwegian aluminum group Norsk Hydro and global miner Rio Tinto declined to confirm or deny reports that they may place separate bids for Canada's Alcan.

Credit: Reuters/Charles Platiau

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OSLO/KUALA LUMPUR (Reuters) - Norwegian aluminum group Norsk Hydro (NHY.OL) and global miner Rio Tinto (RIO.AX) (RIO.L) declined to confirm or deny reports that they may place separate bids for Canada's Alcan AL.TO(AL.N).

Alcan's shares rose on Monday on newspaper reports that both may seek to trump Alcoa's (AA.N) $28.5 billion hostile bid for Alcan, a takeover that would create the world's largest aluminum group at a time of surging demand for the light-weight metal.

"We always consider opportunities but whether or not we are moving ahead, doing anything like due diligence, is pure speculation," Rio Tinto Aluminium chief executive Oscar Groeneveld told Reuters in an interview.

"I can't comment on that speculation because it is only speculation," he said on the sidelines of an economic conference in the Malaysian capital.

Hydro spokeswoman Inger Sethov said: "We don't comment on any kind of market speculation over a rumored strategic move."

The Sydney Morning Herald reported that Rio Tinto had hired Deutsche Bank (DBKGn.DE) to advise it on a possible Alcan bid.

Canadian daily Globe and Mail, citing investment bankers, reported that Norsk Hydro was working on a bid for Alcan worth more than $30 billion, which could be partially financed by tapping into Norway's $300 billion-plus offshore oil fund.

BHP Billiton Ltd Plc (BHP.AX) (BLT.L), Companhia Vale do Rio Doce (VALE5.SA), United Company RUSAL, Anglo American AA.L and Xstrata Plc XTA.L are also seen as potential Alcan suitors.

Demand from China and other developing economies has spurred demand for aluminum. Prices are nevertheless off their historic highs of 2006 as new smelters are built and existing plants expanded.

Norsk Hydro shares were up 0.2 percent at 212 crowns at 0753 GMT, valuing the company at around $45 billion, including its oil and gas assets, which it is selling to Statoil (STL.OL).

Rio stock was up 2.4 percent at A$ 96.36 on the Australian stock exchange. The London-listed stock was flat.

The DJ Stoxx Basic Resources index .SXPP was up 0.6 percent.

NORWAY'S HELPING HAND?

Norsk Hydro, 43 percent owned by the Norwegian government, is one of the world's biggest integrated aluminum companies, having agreed to sell its oil and gas business to Norwegian rival Statoil for nearly $30 billion late last year.

Alcan's enterprise value is about twice that of Norsk Hydro's aluminum business, said analysts, making a bid a big burden for the company, especially if the government was keen on keeping its leading stake in the Norwegian industry flagship.

Norwegian governments have never taken money out of the country's oil fund besides spending about 4 percent per year of the revenue -- seen as the fund's long-term rate of return. The ministry that owns the state's Hydro shares declined to comment.

Norway's oil fund has been renamed as a "pension fund" to underline its purpose to protect the value of Norway's oil and gas assets for future generations, signaling that supporting a Hydro deal would be a break from thinking up to now.

Analysts said a Hydro bid appeared unlikely given the scope of work remaining to sell its oil and gas assets to Statoil, although such a deal would play to Norsk Hydro's ambitions.

"It is not completely unthinkable, Hydro has ambitions to grow," said Kjetil Bakken, analyst at Fondsfinans.

(Additional reporting by Richard Solem, Camilla Bergsli and Aasa Christine Stoltz)

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