Metals and Mining
Alcoa Takes Stake in Rio Tinto
By Simon Constable
TheStreet.com Staff Reporter
2/1/2008 1:33 PM EST
URL: http://www.thestreet.com/newsanalysis/metals-and-mining/10401623.html
Shares of London-based Rio Tinto
(RTP)
were rallying 7% on news that aluminum giant Alcoa
(AA)
and the Aluminum Corp. of China
(ACH)
would together buy a 12% stake in the company.
"This unsolicited development, of which we had no prior notice, reinforces our view of the long-term value of Rio Tinto," says Rio Tinto Chairman Paul Skinner.
Alcoa said it will contribute up to $1.2 billion to the roughly $14 billion total investment.
The surprise move may throw a roadblock in the attempts by Australia's BHP
(BHP)
to follow through on its bid for Rio Tinto, made last November.
The mining patch has seen a flurry of merger activity over the past few years with Freeport-McMoRan Copper & Gold
(FCX)
purchasing Phelps Dodge, Companhia Vale do Rio Doce
(RIO)
gobbling up Inco and Rio Tinto buying Alcan.
Shares of BHP were rallying about 8%, while those of CVRD were ahead by 4.5%. Alcoa was adding 1%, and Aluminum Corp. of China was up 11%.
