Chinalco, Alcoa stake in Rio hinders BHP

By Eleanor Wason

LONDON, Feb 1 (Reuters) - The acquisition of a $14 billion Rio Tinto (RIO.L: Quote, Profile, Research) stake by China and U.S. aluminium maker Alcoa (AA.N: Quote, Profile, Research) cannot block a BHP Billiton (BLT.L: Quote, Profile, Research) takeover of Rio but does make a hostile bid difficult, bankers and lawyers said.

State-owned Aluminum Corp of China (Chinalco) and Alcoa said on Friday they had bought a 12 percent stake in Rio's London listed shares, representing 9 percent of the dual-listed company.

BHP (BHP.AX: Quote, Profile, Research), the world's top miner, has proposed taking over rival Rio (RIO.AX: Quote, Profile, Research) with a scheme of arrangement, which requires a buyer to win the approval of voting shareholders representing 75 percent of the company to gain control. It can then oblige minority shareholders to sell out.

If BHP wants to turn hostile, however, it would have to revert to a straight offer for Rio. That would mean gaining approval from more than 90 percent of the investor base in order to force out minority shareholders.

Chinalco and Alcoa said they did not currently plan to make an offer for the whole of Rio, but reserved the right to do so if another party made a firm bid.

"Previously with a stake like this, it was used to call somebody's bluff and the minority shareholders would eventually cave in and sell but taking a blocking stake for tactical reasons has become more common recently," a mergers and acquisitions lawyer said.

He declined to be named because his firm advises one of the parties involved.

"It can be used strategically to derail a takeover, make money by leveraging the price up or maybe because they're thinking of making an offer themselves," he added.