The new company will be the worlds number one aluminium producer with output of four million tonne per year, and also the top alumina producer with output of 11 million tonne, the source said, on condition of anonymity. Rusal and Sual both declined to comment. No comment was immediately available from Glencore, a commodities trading house.
The Financial Times estimated the value of the deal at $30 billion and said the combined company will be chaired by Brian Gilbertson, the head of Sual, and run by Alexander Bulygin, who is chief executive of Rusal. It will be listed on the London Stock Exchange, according to a non-binding agreement signed by the three parties and seen by the newspaper. The paper, quoting a person close to the deal, said the memorandum was signed last Friday and the London listing was expected within three years. The deal, subject to due diligence, is believed to have been cleared by Russian president Vladimir Putin and expected to be announced by the end of September, the paper said.
The FT added that Rusal would own 64.5% of the new firm, and Sual and Glencore would control 21.5% and 14%, respectively. Those shareholdings were also reported by a Swiss newspaper, the Neue Zuercher Zeitung, on Tuesday. Rusal is the worlds third-largest aluminium producer behind US Alcoa Inc and Alcan Inc. Earlier, Rusal declined to comment on a published report that it had agreed to acquire fellow producer OAO Sual Group and the alumina assets of Glencore International AG for about $30 billion.
Scot Hoffman, an outside spokesman for Rusal in New York, declined to comment. Attempts by Bloomberg to contact Glencore officials in Baar, Switzerland, and Stamford, Connecticut, werent successful. Rusal needs the security of alumina supply, said Peter Richardson, chief metals economist at Deutsche Bank AG, in Melbourne. Any merger will go far in entrenching Rusals growth in alumina, he said. Rusal, controlled by Russian billionaire Oleg Deripaska, will buy Glencore's alumina assets by issuing new shares, the FT said. The acquisition would have no cash element and would be paid for entirely with Rusal shares, the FT said.
Glencore, the worlds largest commodities trader, buys and sells base metals including aluminum, nickel, copper, zinc and lead. The privately held company had sales of $91 billion in fiscal 2005, up from $71 billion a year earlier, and has stakes in mines, smelters and metals refineries.
Consolidation in the industry is always positive, said Tim Barker, BT Financial Group in Sydney, which advises and manages $54 billion of assets. Should the proposal go ahead, it will be a serious contender for the top dog, he said.
Rusal announced earlier on Thursday that it plans to complete a buyout of minority shareholders in its Russian plants by the end of this year.