Private Equity Heads Up Rio Tinto Auction

Private equity firms are understood to be in pole position to acquire Alcan Engineered Products, a subsidiary of Anglo-Australian mining group Rio Tinto.

A banking source told Thomson Reuters that a deal is imminent, with private equity likely to buy the supplier of customised alloys for aircraft for approximately £2bn (US$3.55bn).

US private equity giants The Carlyle Group, TPG Capital and Apollo have previously been linked with the auction of Alcan Engineered Products.

This appears to be significantly less than the US$5bn to US$6bn valuation Rio Tinto is reported to have put on the unit when it announced that it was putting Alcan Engineered Products up for sale in August. Deutsche Bank and Rothschild are managing the sale, which was expected to enter the first-round offer stage by mid-September.

Debt for the deal has not yet been arranged.

Rio Tinto has pledged to make US$15bn of asset sales in order to part refinance a US$40bn loan it took out in December of last year for the purpose of funding its purchase of Canadian aluminium manufacturer Alcan.

By Robert Venes

Source: Thomson Merger News