Rio Tinto sells US packaging unit for $1.2bn

Divestment planned soon after Alcan acquisition was delayed by downturn

Fresh from last week's successful $15.2bn (£9.4bn) rights issue, Rio Tinto yesterday announced the sale of parts of its US food packaging business for $1.2bn.

The sale – to the US food and drink packing specialist Bemis – will raise $1bn in cash and another $200m in shares. Alongside last week's equity raising, and a string of other asset sales, the move is another step in Rio's strategy to pay down the $39bn debt pile accrued from its top-of-the-market purchase of Alcan in 2007.

Guy Elliott, Rio Tinto's chief financial officer, said: "The sale of the Food Americas division is the first significant step in reducing the asset portfolio acquired with Alcan. The transaction represents solid value given the challenging financial environment. We believe this is a positive outcome for Food Americas as it is a good fit with Bemis's business and stands to benefit from an excellent platform for growth and development in the regional food sectors in the Americas."

After the Alcan purchase, dual London and Sydney-listed Rio Tinto had planned to sell the group's non-core packaging operations straight away. But the financial crisis ripped the bottom out of commodities markets and Rio's divestment plans ran aground.

With $8.9bn-worth of debt repayments looming this year and another $10bn next, Rio launched the ill-fated $19.5bn tie-up with the Chinese giant Chinalco. But the plan was finally abandoned last month after shareholders baulked at the proposal to raise Chinalco's stake to 18 per cent of the company and give it slices of between 15 and 50 per cent of a range of Rio's core assets, including the Hamersley iron ore mine.

Buoyed by steadily rising commodities prices and early signs of recovery in key economies such as China, Rio Tinto launched a rights issue which was taken up by 97 per cent of British shareholders and 95 per cent of their Australian counterparts.

The company has also made another $3.7bn-worth of divestments so far this year, with sales including a Chinese aluminium smelter, iron ore and potash assets in Brazil and a coal mine in Wyoming.

The sale of Alcan's Food Americas packaging business to Bemis is expected to be completed in September, subject to the necessary regulatory approval. Rio is left with Alcan's European food packaging division still to sell, as well as its global tobacco, pharmaceutical, and beauty products packaging businesses. Analysts estimate a combined price of upwards of $2bn.

Food Americas saw revenues of $1.5bn last year, which is about 23 per cent of Alcan packaging's total.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Guru Careers: Financial Director / FD / Senior Finance Manager

Up to 70k DOE: Guru Careers: We are seeking an experienced Financial Director ...

Recruitment Genius: Junior / Apprentice Sales Executives - OTE £50,000

£11000 - £50000 per annum: Recruitment Genius: This financial company offer ma...

SThree: Recruitment Consultant

competitive + incentives + uncapped comms: SThree: Did you know? 98% of our di...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen