Leading international mining group Rio Tinto and aluminium and packaging giant Alcan today (July 12) announced that they had reached agreement for Rio Tinto to make a US$101 (€73.3) per common share recommended cash offer for Alcan.
The proposed deal, unanimously recommended to shareholders by Alcan’s board, values the packaging, alumina processing, primary metal and aluminium fabrication and engineering specialist at US$38.1bn (€27.6bn). If the acquisition goes ahead, it is expected to generate some US$600m (€436m) in annual post-tax synergies.
The two companies say the resulting combined aluminium product group, to be known as Rio Tinto Alcan, would be “a new global leader in the aluminium industry with large, long-life, low cost assets worldwide”. Rio Tinto says that on the deal’s conclusion it intends retaining its focus on mining and metal activities by selling Alcan’s packaging division, a move “agreed with Alcan”. The Paris-headquartered Alcan Packaging business has 130 flexible and speciality packaging plants in 35 countries worldwide employing 31,000 staff. It claims to be the world leader in food flexible, pharmaceutical, beauty and tobacco packaging manufacture, and the number two producer of value-added speciality packaging; its numerous sites produce packaging from plastics, engineered films, aluminium, paper and glass for the food and beverage, pharmaceutical and medical, beauty and personal care and tobacco industries.
Commenting on the “attractiveness” to Alcan shareholders of a deal which the company’s chairman Yves Fortier said was “the outcome of a rigorous and thorough process conducted by the Alcan board”, Dick Evans, Alcan president and ceo, said: “With an attractive cost position bolstered by a strong technology portfolio, complementary refining and smelting asserts and a strong growth pipeline, the combination of Rio Tinto and Alcan will create a new global leader in the aluminium industry. Alcan Packaging will have better opportunities for development and success following its divestiture and we will ensure a smooth transition for all involved.”
The enlarged aluminium product group, Rio Tinto Alcan, would be headquartered in Montréal and led by Dick Evans.
In May Alcan’s Board recommended its shareholders reject a hostile bid from Alcoa (US$58.60 in cash and 0.4108 of a share of Alcoa common stock for each outstanding Alcan common share), describing the offer as “inadequate in multiple respects” and “contrary to the best interests of Alcan’s shareholders”.
Alcan president and ceo Dick Evans says Alcan Packaging will “have better opportunities for development and success” following the proposed Rio Tinto deal