Rio Tinto Alcan Acquisition Gets The Green Light

By Stewart Douglas

Mining giants Rio Tinto have today been given the all clear from US authorities for its proposed acquisition of Canadian company Alcan.

The Anglo-Australian listed group looks set to complete its purchase of Alcan at a value of $38.1 billion, after antitrust barriers were cleared in the US.

While analysts had widely predicted the move to go through without any problems, authorities were required to investigate whether the proposed takeover would hinder competition within the market, with a veto power where a monopoly would be envisaged.

The move now means that the Canadian company will become part of the wider Rio Tinto group, with an immediate post-takeover management restructure certainly on the cards.

Further, the company has not long since rejected Alcoa’s offering of $27 billion as a significant undervaluation of corporate assets.  With the move to acquisition from Rio Tinto coming in at around 30% more than the Alcoa bid, analysts have suggested that the initial offering was indeed below the true worth of the company.

The move is set to catapult the Rio Tinto group to the number one producer of bauxite and aluminium in the world, at a time when the metal industry is experiencing significant price inflation leading to soaring profits.

While the plans were approved without a hitch, trading in Rio Tinto shares was today significantly up, with news of the takeover around the corner.

Trade on both Rio Tinto exchanges in the UK and Australia was up after the announcement, reflecting the significance of the news for investors.

The purchase looks set to work out at around $101 a share, and could be completed over the course of the next few months to incorporate Alcan within the London listed group.