Rio Tinto Takeover Of Alcan Approved

European Union says the deal won't hinder competition in the European market; takeover will make Rio Tinto the world's biggest producer of aluminum and bauxite.

BRUSSELS, Belgium (AP) — European Union antitrust regulators Wednesday approved the purchase of Canadian aluminum company Alcan Inc. by global miner Rio Tinto, saying the deal would not hinder competition in the European market.
London-based Rio Tinto PLC's $39.65 billion (27.99 billion euros) purchase of Montreal-based Alcan will make Rio Tinto the world's biggest producer of aluminum and bauxite.
Approval from regulatory authorities is a condition of Rio Tinto's offer to purchase Alcan's outstanding shares.
Rio Tinto officials were informed of the EU's green light late Tuesday. The company has also received clearance from Canadian, U.S. and Australian competition authorities.
The European Commission said the deal ''would not significantly impede effective competition'' within the 27-nation bloc, saying that overlaps between the two companies in bauxite mining, alumina refining and primary aluminum were limited.
It added the combined company would ''continue to face strong competitors with significant market shares.'' It said strong demand from China would also limit the ability of the new merged company to ''prevent its competitors from competing effectively'' in the supply of alumina and aluminum.
Rio Tinto and Alcan's main rivals will be the Alcoa Inc. of the United States and Russia's Rusal.
The EU executive reminded Rio Tinto that Alcan would still have to comply with a previous EU antitrust decision when Alcan bought French aluminum producer Pechiney in 2003, notably on markets for licensing of alumina refining and smelter cell technologies.
Rio Tinto has offered $101 (71.30 euros) for each Alcan common share, for a total equity consideration of approximately $38.1 billion (26.9 billion euros) and an enterprise value of $44 billion (31.1 billion euros).
The deal is slated to close as planned in the fourth quarter of 2007.
An integration management office will be created once the purchase closes. The office will be responsible for filling 70 senior positions in the aluminum division, to be named Rio Tinto Alcan.