July 6 (Bloomberg) -- Rio Tinto Group, the world’s third- largest mining company, sold part of its Alcan packaging unit to Bemis Co. for $1.2 billion to cut debt.
Bemis agreed to pay $1 billion in cash and $200 million in stock for the Food Americas business of Alcan Packaging, London- based Rio said today in a statement. The acquisition will boost earnings from next year, Bemis, the largest producer of flexible plastic packaging in the Americas, said in a statement.
Rio has raised $18.9 billion selling assets and stock this year to cut debt that ballooned to $38.7 billion at the end of 2008 after buying Alcan Inc. The company’s remaining packaging assets could fetch more than $2 billion based on the valuations used in the sale to Bemis, according to Citigroup Inc.
“The continued divestment of non-core assets is positive for Rio as it frees up capital to reduce debt,” Citigroup’s Sydney-based analyst Clarke Wilkins said today in a note to clients. A repaired balance sheet from the recent rights offer “also allows a stronger bargaining position in the divestment of remaining assets to avoid fire sale prices,” he said.
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