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Commodities & Metals

Does Rio Tinto (RTP) Deal Put Alcoa (AA) In Play?

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By Douglas A. McIntyre Updated Published

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The Chinese government-controlled mining and metals company Chinalco is putting $19.5 billion into publicly traded peer Rio Tinto (TRP). A billion dollars of the cash will go to buying back a piece of RTP owned by Alcoa (AA).

If  China believes that it is getting a piece of RTP’s assets on the cheap, it is right.

The price of metals has collapsed driven by falling demand as the world moves more deeper into a recession. A year ago, BHP Billiton (BHP) buy Rio Tinto rocketed up on takeover  talk.

China’s play may be very simple. It has the capital to buy assets which will appreciate in value when demand rebounds in an industrial recovery.  RTP shares have dropped from a 52-week high of over $558 to just above $112.

If there is long-term money to be made in buying and selling metal assets, Alcoa may be the next target on the list. Its shares have fallen from $45 to $8 this year and its market cap is only $6 billion. An acquirer who believes that the question is not if metal prices will rebound but when, would find Alcoa remarkably inexpensive.

As of today Alcoa is in play.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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