Pittsburgh – Alcoa Inc. is being targeted by two foreign mining giants who are each preparing $40 billion takeover bids for the aluminum producer, a British newspaper reported. Alcoa shares rose more than 6 percent Tuesday, although some analysts questioned whether such a deal was likely.
BHP Billiton Ltd., the world’s largest mining company, and Rio Tinto PLC, the world’s second-largest iron-ore producer, both based in Melbourne, Australia, are said to be considering offers, the Times of London reported in Tuesday’s editions, citing unnamed sources.
Alcoa shares rose $2.10, or 6.38 percent, to close at $35 Tuesday on the New York Stock Exchange after rising as high as $36.05 earlier in the session.
Officials with the mining companies declined to comment on the report Tuesday, as did Alcoa spokesman Kevin Lowery.
“We don’t comment on rumors and market speculation,” Lowery said. “It’s not prudent to do so, nor is it productive.”
Wall Street analysts Charles Bradford of Soleil-Bradford Research and Peter Ward of Lehman Bros. doubted such a takeover because BHP and Rio Tinto are focused more on the mining and raw-materials end of the business than “downstream” industries such as the manufacture of aerospace equipment and auto parts, which Alcoa emphasizes.
Ward also questioned the value of such a takeover because Alcoa shares have already increased 20 percent year to date, against a market that has grown just 1.4 percent.
“The risk/reward of these shares has now declined from attractive to average,” he said.
