Rio Said to Be in Talks With Sun Over Alcan Unit Sale

LONDON, Mar. 25 -- Rio Tinto Group, the world's second-largest aluminum producer, is in talks to sell its Alcan cosmetics-packaging unit to the European unit of private-equity firm Sun Capital Partners Inc., according to three people with knowledge of the negotiations.

Sun European Partners LLP had been competing with firms, including the Carlyle Group and Paris-based Butler Capital Partners, for the assets, said two of the people who declined to be identified because an agreement hasn't been reached.

Alcan Packaging Beauty makes containers for the cosmetics industry at 26 sites in Europe, Asia and the Americas. It had sales of $932 million in 2008 and employed 8,500 people, according to the unit's Web site. The price may reach 100 million euros ($133.4 million) and the transaction involves significant restructuring costs, two of the people said.

Nick Cobban, a spokesman for London-based Rio, declined to comment. Tom Roberts, external spokesman for Boca Raton, Florida-based Sun, and Rosanna Konarzewski, a spokeswoman for Carlyle, and an official from Butler Capital also declined to comment.

Rio sold more than $10 billion of assets and raised $15.2 billion in a London share sale in June to pay debt it took on when it bought Canadian aluminum producer Alcan Inc. for $38.1 billion in 2007. Rio also agreed in June to create an iron-ore venture with BHP Billiton Ltd., with BHP pledging to make a payment of $5.8 billion to Rio when the deal is completed.

Rio shares rose 54.5 pence, or 1.4 percent, to close at 3,877.5 pence on the London Stock Exchange, taking this year's gain to 14 percent. Aluminum, used in some of Alcan's packaging, for delivery in three months has jumped 55 percent in the past year to $2,197 a metric ton on the London Metal Exchange.

The sale would follow Rio's agreement in August to sell most of the Alcan packaging unit to Australia's Amcor Ltd. Rio agreed last year to sell another part of the packaging unit to Bemis Co.

Rio Chief Financial Officer Guy Elliott said last month the company still has to sell part of Alcan's engineered products unit, which makes products for aerospace and defense uses. It no longer plans to sell its borax and talc units, he said Feb. 2.