Australia-based mining company BHP Billiton Ltd. is considering making a rival offer for takeover target Canadian aluminum producer Alcan Inc. The firm has also appointed investment bank Merrill Lynch to explore the possibility of making an offer. However. Market experts still believe that even if BHP Billiton has hired advisers to put Alcan under the microscope, but does not suggest the world’s biggest miner will end up placing in an offer for the Canadian aluminium producer.
Alcan in May had rejected a $27 billion takeover offer from its closest competitor; US rival Alcoa, on the ground that it was in talks with other firms and sparked hyperactive conjecture over the identities of other potential buyers. According to the reports Rio has hired Deutsche Bank to look into the possibilities regarding the takeover. Both the firms’ preferred to remain shut on divulging anything on the issue. Other names projected as possible bidders for Alcan include Companhia Vale do Rio Doce, or CVRD, the world’s second biggest mining company, Swiss-based Xstrata Plc and UK-based Anglo American Plc.
The British newspaper report has said that BHP Billiton had revived plans for a $40 billion takeover of New York-based Alcoa Inc. rather than Alcan. Reports suggest that BHP was in the preliminary stages of assessing the advantage of a takeover and the firm is not thought to have officially approached Alcoa. Australian aluminium producer Alumina Ltd also has a share at risk in any campaign that breaks out for Alcoa, with its 40 percent ownership Alcoa joint venture, Alcoa World Alumina and Chemicals (AWAC), the world’s largest alumina business. Market analysts are of the view that should a takeover of Alcoa take place, the successful shopper may seek to take over Alumina to gain complete control of the joint venture.
At the same time there are also view expressed that an offer for Alcan or Alcoa by BHP was unlikely as it was focused on expanding organically. As a matter of fact BHP has got a very extensive plans of expansions across the board, not just in alumina, but things like iron ore along with other components on what it would like to concentrate more.
In addition, market experts are unanimous on the point that any firm looking at Alcoa would only be interested in its upstream, or mining and smelting, operations, rather than downstream businesses that make products such as kitchen foil. Without a doubt, Alcan, which does not have the similar type of downstream business as Alcoa, may be a more exciting acquisition target for large mining companies trying to increase aluminum operations.
