Canada OKs Rio Tinto Buy of Alcan

An official with the government agency said Thursday that approval was provided under the Canadian Competition Act after it was determined the merger would not result in a "substantial lessening of competition."

The takeover will make London-based Rio Tinto the world's biggest producer of aluminum and bauxite. Its main rivals will be the U.S.'s Alcoa Inc. and Russia's Rusal.

Rio Tinto announced Thursday that it has completed the financial agreements that will pay for the Alcan acquisition. It will borrow $40 billion, representing the largest loan by a British company and fourth largest in the world. The loan is being underwritten by the Royal Bank of Scotland, the Deutsche Bank, Credit Suisse and la Societe Generale.

"This extremely positive response underlines the strength of Rio Tinto's existing asset base, the attractiveness of the Alcan transaction and the solid credit profile of the enlarged Rio Tinto Group," Rio Tinto CFO Guy Elliott said in a news release.

"This bodes well for our future refinancing plans in the debt capital markets."

Regulatory approvals from several countries including France, Britain and Australia is a condition of Rio Tinto's offer to purchase Alcan's outstanding shares. Earlier this week, it received U.S. regulatory approval.

Rio Tinto has offered $101 for each Alcan common share, for a total equity consideration of approximately $38.1 billion and an enterprise value of $44 billion.

The complexity of winning regulatory approvals from several jurisdictions is expected to delay the offer deadline of Sept. 24. However, the deal is slated to close as planned in the fourth quarter of 2007.

Rio Tinto shareholders will vote on the acquisition during meetings Sept. 14 in London and Sept. 28 in Australia.

Meanwhile, an internal note filed Wednesday with U.S. regulators outlined guidelines governing the integration process between the two companies.

An integration management office will be created once the purchase closes. The office will be responsible for filling 70 senior positions in the aluminum division, to be named Rio Tinto Alcan.

Decisions regarding personnel will be based on merit assessed by experience, capability and potential, not seniority or tenure, said the note signed by Jean-Christophe Deslarzes, Alcan human resources vice president, and Phillip Strachan, chief financial officer of Rio Tinto Aluminum.

While Rio Tinto's policies and business systems will be the norm across the enlarged company, there will be opportunities to adopt and implement Alcan's practices, the note added.

The integration process will be based on a 100-day effort to identify $600 million in annual synergies.