BHP Billiton remains silent on whether to launch an acquisition of Alcoa

BHP Billiton remains silent on whether the company plans to acquire Alcoa for $47 billion after Rio Tinto acquires Alcan.

Financial market participants believe that BHP Billiton may make an offer to Alcoa in the next few weeks. This speculation is rumored in exchanges in the US, UK and Australia. But BHP Billiton declined to comment on the speculation.

On Monday, BHP Billiton's share price was at $38.01 per share during the day and was down 96 cents at $38.20 per share.

Rio Tinto successfully acquired Alcoa and became the world's largest aluminum producer and the fourth largest alumina producer in the world. Alcoa’s status is at stake.

Before Rio Tinto acquired Alcan, Alcoa submitted an offer to Alcan.

If BHP Billiton makes an offer to Alcoa, its $47 billion offer will exceed the price of Rio Tinto's acquisition of Alcan.

If the acquisition is successful, BHP Billiton will become the world's largest producer of aluminum and alumina.

The aluminum industry situation is still very promising, and China's demand for aluminum is expected to remain strong.

The failure of Alcoa's bidding shifted its focus to Alumina, which holds a 40% stake in Alumina.

Dutch bank analyst Rob Clifford said, "Alcoa can only take limited measures, including the acquisition of alumina companies, or the acquisition of Alcoa by BHP Billiton or other companies, but all the speculation is because of the alumina company."

Clifford said that in theory, BHP Billiton's acquisition of Alcoa is a good move.

He said, "This strategy is correct. This will give BHP Billiton and Alcoa a leading position in the alumina market, and they will be more proactive from a commodity pricing perspective."

“I think this is a pretty good strategy, and Rio Tinto’s acquisition of Alcan is also a good strategy, but it depends on the price.”

BHP Billiton did not respond to these speculations.

Credit Suisse Boston Bank said that if BHP Billiton's acquisition of Alcoa succeeds, the ratio of BHP Billiton's aluminum and alumina industry's revenue to total revenue will increase to around 25% in 2008, compared with only 7% in 2006.

According to CSFB analyst Peter O'Connor, “Aluminium has been the worst performer of all base metals in the past five years. However, due to higher than expected growth in aluminum demand in China and Russia, the aluminum market is very promising.”

But some analysts have warned that if BHP Billiton dominates the aluminum and alumina markets, it is not a good thing for global regulators.

Aluminum is the most widely used metal in the world.



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