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Alcoa shares rise amid speculation over buyout

Australian mining giants mull offers, newspaper reports

PITTSBURGH -- Alcoa Inc. is being targeted by two foreign mining giants who are each preparing $40 billion takeover bids for the aluminum producer, a British newspaper reported. Alcoa shares rose $2.10, or 6.4 percent, to $35, yesterday although some analysts questioned whether such a deal was likely.

BHP Billiton Ltd., the world's largest mining company, and Rio Tinto PLC, the world's second-largest iron ore producer, both based in Australia, are said to be considering offers, the Times of London reported, citing people it did not name.

Officials with the mining companies declined to comment on the report yesterday, as did an Alcoa spokesman.

Wall Street analysts Charles Bradford of Soleil-Bradford Research and Peter Ward of Lehman Brothers doubted such a takeover because BHP or Rio Tinto are focused more on the mining and raw materials than on industries such as making aerospace equipment and auto parts, which Alcoa emphasizes.

"In our opinion, the risk/reward of these shares has now declined from attractive to average," Ward's note said.

The newspaper said neither BHP Billiton nor Rio Tinto had approached Alcoa about a bid, and that BHP Billiton has already done the groundwork for a bid while Rio Tinto had not progressed as far.