Chinalco, Alcoa acquire 12 per cent blocking stake in Rio Tinto for $14 billion

01 February 2008

Mumbai: China's state-owned aluminium producer Aluminum Corporation of China (Chinalco) has teamed up with US group Alcoa to acquire a 12 per cent stake in Rio Tito for $114 billion, putting pressure on BHP Billiton.

The $14 billion Chinese swoop comes days ahead a regulatory deadline for BHP to make a firm offer for London-listed Rio or to walk away.

Rio Tinto chairman Paul Skinner said in a terse statement, "This unsolicited development, of which we had no prior notice, reinforces our view of the long term value of Rio Tinto. In line with our long standing strategy, we shall continue to focus on operating our many world class assets to maximise value and prospects for all shareholders."

Chinalco and Alcoa said they had bought a 12 per cent stake in Rio, the world's No 2 miner by market value, giving them a total holding in the group of around 9 per cent, including Rio's Australian listed shares. Chinalco takes up the most part of the 12 per cent, company sources said.

The two companies paid a total of $14.05 billion for the holding through a Singapore-based entity, with Alcoa contributing up to $1.2 billion.

The transaction was executed by investment bank Lehman Brothers at £60 a share, 21 per cent above Rio's closing price of £49.56 pounds yesterday. The 12 per cent blocking stake may not require approvals from the foreign investments review board.