Alcoa loses Alcan bid to Rio Tinto
Rio Tinto has agreed to buy Canadian aluminum company Alcan for $38 billion, making Alcoa withdraw its hostile bid. Bob Moon has the story.
Logo at Alcan's headquarters in Paris, France (Getty Images)
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KAI RYSSDAL: There was also a company that's something less than a household name. Rio Tinto. It's agreed to buy Canada's big aluminum company Alcan for $38 billion.
And if you ever needed proof of globalization's wide, wide reach, consider this: Here we have a company whose name translates in Spanish as "Red River" but is actually a British-Australian concern, which swooped in to outbid a U.S. company, Alcoa. And which is borrowing money from banks in Switzerland, Germany, Scotland and France to get the deal done.
So where does this leave Alcoa on the international stage? Marketplace's Bob Moon can't wait to tell us.
COMMERCIAL JINGLE: We can't wait for tomorrow. Alcoa can't wait!
Bob Moon: If only Alcoa could have waited. The Aluminum Company of America sold off its Canadian and international units back in 1928, creating a spinoff that became known as Alcan.
Fast forward to 2007, and Alcoa decided it wanted Alcan back. Two months ago, CEO Alain Belda explained Alcoa's urge to merge and be aluminum's king of the hill again.
Alain BELDA: The new company will bolster competitiveness against increasingly large, low-cost suppliers from Russia, China and elsewhere.
Now that Rio Tinto has snatched Alcan out from under Alcoa, the U.S. company will drop to third place, behind RusAl, a Russian company. Lou Whiteman watches the metals industry for The Deal.
Lous WHITEMAN: So much of the growth right now is coming from Asia, and coming from India, and a big, giant Russian producer, as well as growing producers in China and parts of Asia, have kind of put the North American companies on the defensive.
Whiteman says the situation has become all the more urgent for Alcoa, which may find itself the next takeover target.
WHITEMAN: They made that argument that they needed to grow to thrive. Now they're left without a partner, the argument might come back to haunt them — that if they don't have this option to grow through Alcan, can they make it on their own, or would they be better as part of a more global, diversified company.
Alcoa formally withdrew its offer for Alcan this afternoon.
I'm Bob Moon for Marketplace.
