April 30 (Bloomberg) -- Rio Tinto Group rose to its highest in five months in Sydney trading after Bemis Co. said it was in talks to buy part of the packaging business owned by the world’s third-largest mining company.

Rio closed 5 percent higher at A$64.43 on the Australian stock exchange, its highest price since Nov. 19. BHP Billiton Ltd. dropped its $66 billion hostile bid on Nov. 25.

The London-based company is selling assets to help reduce debt after acquiring aluminum producer Alcan Inc. in 2007 for $38.1 billion. U.S.-based Bemis joins Australia’s Amcor Ltd. in considering the purchase of the Alcan packaging business.

“If there are other groups looking to go into that bidding process there is potential Rio could get a better price for it,” Jamie Spiteri, head dealer at Shaw Stockbroking Ltd., said in Sydney. “It does actually help ensure that the course of recapitalization is taking place for Rio.”

Bemis on April 28 said it took a one-off charge of $9.1 million in the March quarter, mostly associated with due diligence fees on a potential acquisition of buying a portion of Rio’s packaging unit. “Confidential efforts are ongoing,” said Gene C. Wulf, senior vice president of Bemis on an earnings teleconference call.

Standard & Poor’s Ratings Services placed Bemis’ ratings on credit watch with “negative implications” because of the talks with Rio.

Ian Head, spokesman for Rio, declined to comment when contacted in Melbourne today.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

Last Updated: April 30, 2009 03:27 EDT