Mining group Rio Tinto is to buy Canadian aluminium producer Alcan in a $38.1 billion (£18.7 billion) deal agreed by the two companies.
Confirmation of the takeover agreement came after Rio Tinto stock on the Australian market climbed to a record high today amid anticipation that such an agreement would be announced.
The acquisition by the Anglo-Australian group will create the world's largest aluminium company and comes as mining firms increasingly seek to consolidate their operations amid rising metal prices.
In making the $101 (£ 50) a share offer for Alcan, Rio Tinto has topped a recent $28 billion (£14 billion) hostile offer made for the company by US mining group Alcoa.
Reports had also suggested that the world's biggest mining group, BHP, had been considering making a bid for Alcan.
The latest offer represents a premium of 32.8 per cent on Alcoa's current share price, Rio Tinto said in a statement.
It confirmed that the new company would be known as Rio Tinto Alcan and would have its headquarters in the Canadian city of Montreal, where current Alcan chief executive Dick Evans will oversee the business.
As part of the deal the two companies have also agreed to sell Alcan's packaging business, a move which may signal their intent to focus on mining and refining operations.
Commenting on the deal, which has been unanimously accepted by Alcan's board, Mr Evans said: "With an attractive cost position bolstered by a strong technology portfolio, complementary refining and smelting assets, and a strong growth pipeline, the combination of Rio Tinto and Alcan will create a new global leader in the aluminium industry."