19 Aug 2009

Rio sells packaging unit for $2b to cut debt

11:40 am on 19 August 2009

Mining giant Rio Tinto has agreed to sell its Alcan packaging unit for about $A2 billion to Australian packaging group Amcor in order to ease its debt burden.

The deal is a key part in Rio's effort to reduce its $A38 billion debt.

Amcor says the deal will give it leading global positions in key packaging markets, and it will raise $A1.6 billion through a share rights issue, as well as debt, to fund the deal.

The deal marks Amcor's first big purchase under chief executive Ken MacKenzie, following four years of fixing, closing or selling businesses after an acquisition spree in Europe and the Americas.

The head of research at Tyndall, Roger Collison, says the company is ready to buy more businesses.

Amcor says its profit before one-offs fell 2% to $360.5 million for the 12 months to June.