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Rio Tinto chief executive continues to pay high price for Alcan acquisition

The aluminium firm that has cost Tom Albanese his bonus was the subject of a hard-fought battle in 2007

Alcan, formerly known as the Aluminium Company of Canada, became the subject of a fierce bidding war in the summer of 2007, eventually falling to Rio Tinto in a bn (£24bn) acquisition sealed less than a month before the credit crunch brought an abrupt end to a flurry of deal activity.

Rio had been under pressure to come up with a big deal or get swallowed by its more acquisitive peers. In particular, analysts were speculating that in the absence of a deal Rio was likely to end up in the crosshairs of BHP Billiton.

With this in mind, Tom Albanese was promoted to take over from Leigh Clifford, Rio’s chief executive for the previous seven years. He was the man who would get the deal done and secure the company’s independence.

Albanese set his sights on Alcan, which was attempting to fend off a hostile bid from Alcoa, previously known as the Aluminium Company of America. Rio’s intervention offered Alcan shareholders 1 a share – a huge premium on the level at which shares had been trading before Alcoa’s unwanted approach. Albanese’s bold move was also designed to put off the Brazilian group CVRD, now known as Vale, which had been seen as a potential white-knight suitor.

At bn, the price was equivalent to about a third of Rio’s, but nevertheless received the support of investors, passing a shareholder vote with 97% backing.

In the end, the deal was not quite enough to deter BHP Billiton from approaching Rio with a takeover proposal. Twelve months of sabre rattling between the two companies ensued before BHP threw in the towel in late 2008. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds