The world headquarters of Alcoa Inc. is seen along the north shore of the Allegheny River in Pittsburgh, in this May 7 photo. - AP

BHP Billiton Limited, the world's biggest miner, is in talks with private-equity firms to team up for a possible US$40 billion bid for United States aluminum company Alcoa, the Times said on Tuesday.

The United Kingdom newspaper, citing unnamed sources close to the company, said BHP's favoured partner was the Blackstone Group, which had employed Paul O'Neill, former United States Treasury Secretary and chief executive of Alcoa from 1987 to 1999, as one of its special advisers.

Sources familiar with the matter told Reuters last month that BHP had appointed investment bank Merrill Lynch to work on a possible bid for Canada's Alcan, which is the subject of a US$28.7 billion hostile bid from Alcoa.

The offer, which is being resisted by Alcan, has been extended by a month to August 10.

The Times said Alcoa was BHP's preferred target, but it was unwilling to pay a premium for assets that it does not want to retain and so wanted to team up with a bid partner. BHP declined to comment.

BHP, which Credit Suisse sees showing a record A$13.6 billion after tax profit in fiscal 2007, could probably manage the funding of a takeover of Alcoa Inc. and Alcoa's 60 per cent-owned Alumina Limited of Australia, according to analysts.

Newly named chief executive Marius Kloppers, who takes over from Chip Goodyear in October, last week told analysts in Australia he will be looking for opportunistic acquisitions.

- Reuters