Rio Tinto to Buy Alcan for $38 Billion; #1 Aluminum Producer

13 July 2007

Anglo-Australian miner Rio Tinto and Canada’s Alcan reached a US$38.1-billion agreement for Rio Tinto to acquire all of Alcan’s outstanding common shares for US$101 per common share in a recommended, all cash transaction.

The combined aluminium product group, to be named Rio Tinto Alcan, will be a global aluminium industry leader in bauxite, alumina, power, aluminium and technology. Rio Tinto Alcan will be the largest global producer of aluminium and bauxite, based on current production, with a defined pathway through the commissioning of Gove and the committed expansion of Yarwun to becoming the largest producer of alumina.

The combined Rio-Alcan group will have the capability to make 4.4 million tonnes of aluminum a year, putting it ahead of the current leader, Russia’s UC RUSAL.

The attractive physical properties of aluminium have ensured its use in a wide range of applications at all stages of economic development, including construction and infrastructure development, transportation, and consumer goods and packaging.

The offer represents a premium of 65.5% to Alcan’s all time high closing share price of US$61.03 on 4 May 2007 prior to the Alcoa offer. It also represents a premium of 32.8% to the value of Alcoa’s current offer of US$76.03, based on Alcoa’s closing share price on 11 July 2007.

Alcoa withdrew its offer after the Rio Tinto announcement. Analysts speculate that Alcoa is now itself a takeover target.