UPDATE: Alcoa withdraws Alcan offer

Alcoa (AA-N) has pulled its takeover offer for Alcan (AL-T, AL-N) after its bid was jumped by Rio Tinto (RTP-N, RIO-L, RIO-A).

Alcoa’s chief executive Alain Belda said in a statement that “at this price level, we have more attractive options,” which would include investments in other businesses. The company is also bringing back a share repurchase program it had suspended when it made the offer for Alcan.

There is a widely held opinion that BHP Billiton (BHP-N, BLT-L, BHP-A) is preparing a bid for Alcoa, probably with the intention of taking over upstream assets and selling off the aluminum goods business units. Some speculation had suggested that a private equity group might joint BHP in a bid, taking the finished goods part of the deal, but that is now being discounted.

Other companies that might have the backing and taste for an Alcoa bid are Companhia Vale do Rio Doce (RIO-N) and Xstrata (XTA-L).