London/Sydney, July 10 (Reuters): BHP Billiton Ltd, the world’s biggest miner, is in talks with private equity firms to team up for a possible $40-billion bid for the US aluminium company, Alcoa Inc, The Times said on Tuesday.

The UK newspaper, citing unnamed sources close to the company, said BHP’s favoured partner was the Blackstone group, which had employed Paul ’Neill, former United States treasury secretary and chief executive of Alcoa from 1987 to 1999, as one of its special advisers.

Last month, sources said BHP had appointed investment bank Merrill Lynch to work on a possible bid for Canada’s Alcan Inc, which is the subject of a $28.7-billion hostile bid from Alcoa.

The Times said Alcoa was BHP’s preferred target, but it was unwilling to pay a premium for assets that it did 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 Australian $13.6 billion profit after tax in fiscal 2007, could probably manage the funding of a takeover of Alcoa Inc and Alcoa’s 60 per cent-owned Alumina Ltd 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 would be looking for opportunistic acquisitions.

With the added benefit of strong revenues from its oil and gas assets in Europe, Australia and the Gulf of Mexico, BHP is seen to be able to pay cash for its share of a joint bid with Blackstone.

Blackstone has showed no signs of slowing down its buying spree, last week agreeing to pay $26 billion in cash for Hilton Hotels Corp.