SYDNEY, Australia (AP) - Mining giant Rio Tinto has offered to buy Canadian aluminum company Alcan Inc. for $38.1 billion in cash, the companies said Thursday, in a friendly takeover that counters a hostile bid by U.S.-based Alcoa.
The bid exceeds a $28 billion offer of cash and stock from Alcoa Inc. that Alcan's board rejected in May, and would create the world's largest aluminum company.
In a joint statement, Rio Tinto and Alcan said the Anglo-Australian miner was offering $101 per share for Alcan and that Alcan's board was recommending the deal to shareholders.
''This transaction combines two leading and complementary aluminum businesses, and is a further step in Rio Tinto's strategy of creating shareholder value through investing in high quality, large scale, low cost and long life assets in attractive sectors,'' Rio Tinto chairman Paul Skinner said.
Rio Tinto's offer is a 65.5 percent premium on Alcan's closing share price before Pittsburgh-based Alcoa's May 4 takeover bid, and an almost 33 percent premium on Alcoa's offer, the statement said.
The offer is subject to conditions including gaining the support of 66.67 percent of Alcan's shareholders and a breakup fee of $1.05 billion payable by Alcan to Rio Tinto if Alcan pulls out.
Alcoa's Kevin Lowery said the company is reviewing the offer and planned to issue a response later Thursday.
Trading of Rio Tinto's shares were halted in Sydney ahead of the announcement, but had earlier soared to a new record price of 105.19 Australian dollars ($90.58) as rumors swirled that a deal on Alcan was imminent. On the London Stock Exchange, where Rio Tinto's shares are also traded, the price fell 2.5 percent after the announcement to 3,892 pence ($78.99).
Under the deal, a new company named Rio Tinto Alcan would be based in Montreal, Canada, that would be ''a new global leader in the aluminum industry with large, long life, low cost assets worldwide,'' the companies said. It would be headed by Alcan Chief Executive Dick Evans.
Alcan Chairman Yves Fortier said the Rio Tinto offer was ''very attractive'' and offered shareholders ''the certainty of a clear path to completion''—a possible reference to antitrust concerns about Alcoa's bid.
''The agreed transaction with Rio Tinto is the outcome of a rigorous and thorough process conducted by the Alcan board,'' he said.
''It achieves all of our stated goals, providing clearly superior value to Alcan shareholders while remaining true to our core values and obligations as responsible corporate citizens,'' he said.
ABN Amro analyst Rob Clifford told Dow Jones Newswires Alcoa may try to top Rio Tinto's bid, but faced a ''big hurdle'' because of the breakup fee Alcan would be liable for.
Others noted synergies between the two companies said Rio Tinto would likely consolidate operations after the takeover.
''This is a major deal that's been clearly flagged to the market and a very good way for Rio to use its forecast cash pile,'' said Numis Securities analyst John Meyer, predicting that Rio Tinto would ''be quick to sell off some of the downstream operations.''
Rio Tinto said Alcan has high quality, low cost assets and excellent access to long life hydro power, but that the packaging division will be sold off as it does not fit with the Anglo-Australian company's focus on mining and metals.
Alcoa and Alcan were the world's top two aluminum producers until March, when Alcoa was eclipsed as the top producer by the Russia-based United Company Rusal, which was formed through a three-way merger.
Rio Tinto already has a major bauxite operation in Australia, as does Alcan, which would give the combined company a powerful hold over one of the key materials in aluminum production.
Rio Tinto has its Australian base in the southern city of Melbourne and is currently the world's eighth-largest aluminum maker, producing roughly 820,000 tons of aluminum products each year. It is also the world's second-biggest iron ore producer.
Canadian antitrust authorities had sought more information about Alcoa's bid, which was announced after two years of private talks failed to yield a negotiated deal. Alcan said Alcoa has underestimated the regulatory hurdles associated with the proposed combination.
Alcan has a big presence in Canada's French-speaking province of Quebec and approval may have been difficult because of nationalist sentiment there.