The rumour mill is working overtime on BHP Billiton and its reported interest in Alcan, the Canadian aluminium group, and/or Alcoa, its US rival. Complicating matters is the fact that Alcoa is currently trying to take Alcan over, having tabled a $28.7bn bid.
This requires concentration.
Reuters reported on Tuesday that BHP is considering a rival bid for Alcan and has hired Merrill Lynch to advise it. Dow Jones also reports (via Morningstar] on Merrill’s appointment, although the news agency takes a softer line, saying an offer for Alcan is merely being explored.
But all this clashes with a report in The Times on Monday claiming BHP is actually targeting Alcoa, rather than Alcan. Indeed, as Reuters noted on Tuesday, this is the second report from The Times in four months suggesting BHP was pursuing Alcoa.
So we’re wondering here at FT Alphaville whether there is simply confusion over aluminium producers starting with “A,” or whether BHP is targeting both companies, or whether all involved should be consulting a well-known self-support group for those with alcohol dependency.
Certainly, resource and mining analysts in Australia think it is likely that BHP assessed the merits of a takeover of both aluminium producers, although they say there is little to suggest a bid for either is imminent, according to Reuters.
Either way, it fuels one of the big M&A themes of the year: the takeover frenzy among the world’s biggest minerals and metals producers, which Lex neatly described as “metals and mining madness”.
BHP is one of a handful of mining companies, along with Rio Tinto Anglo American, Brazil’s CVRD and Russia’s Rusal that might be interested in bidding for Alcan, which has rejected the bid from Alcoa. The emergence of BHP as a possible white knight in the face of Alcoa’s hostile bid for Alcan came on Monday as Alcoa’s stock hit a six-year high in the US on the Times report that it (not Alcan!) was BHP’s $40bn target.
According to Reuters, most analysts are dismissing the BHP-Alcoa scenario, saying that even if there is some truth to the speculation, a deal would be fraught with operational and regulatory problems. “This is the same rumour that’s been around for six months,” analyst Charles Bradford of Bradford Research/Soleil said. “The current story makes very little sense.”