Alcoa Inc., the world's largest aluminum producer, may face competition for its $26.9 billion bid for rival Alcan Inc. from mining companies including BHP Billiton Ltd. and Rio Tinto Group, said Credit Suisse Group.
Alcoa could also become a target, said Credit Suisse analysts led by New York-based David Gagliano in a May 7 report. Potential bidders include Anglo American Plc., Cia. Vale do Rio Doce, OAO GMK Norilsk Nickel and Teck Cominco Ltd., they said.
A five-year rally in metal prices has sparked 473 deals or bids in the industry this year, valued at $55.4 billion, data compiled by Bloomberg show. Shares of New York-based Alcoa and Alcan surged yesterday, with Alcan rising past the bid price.
"We believe there is a very good possibility that other bidders emerge for either Alcan or Alcoa,'' said the Credit Suisse's analysts. "With what will likely be an extensive antitrust review period, other interested parties will have plenty of time to do their work on both companies.''
Alcoa's offer values Alcan's shares at $73.25, or 20 percent more than the closing price on May 4. Shares of Montreal-based Alcan surged 35 percent to $82.11 in New York, a record daily gain. Alcoa rose 8.3 percent to $38.63, the biggest one-day gain since November 22.
Alcoa's shares are worth between $40 and $50, and Alcan's shares are worth between $70 and $90, Credit Suisse said.
Samantha Evans, a spokeswoman for Melbourne-based BHP Billiton, the world's largest mining company, said the company doesn't comment on rumor and speculation. Ian Head, a spokesman for London-based Rio, the world's third-largest miner, also declined to comment.
Attractive Businesses
London-based Anglo American is the world's second-largest miner, and Brazil's Vale is the world's largest iron ore exporter. Vancouver-based Teck Cominco, the world's second- largest producer of zinc, last year failed in its bid for rival Inco Ltd.
Alcoa and Alcan's alumina and aluminum businesses would be attractive to mining companies, while their packaging and rolling units would lure non-mining companies, Credit Suisse's analysts said. Alcoa and Alcan's combination would control about 25 percent of the alumina and aluminum markets, the analysts said.
The Times of London said Feb. 13 that BHP Billiton and Rio Tinto may be planning bids for Alcoa.
Shares of Melbourne-based Alumina Ltd., Alcoa's partner in the world's biggest alumina producer, surged as much as 41 cents, or 5.6 percent, to A$7.74 on the Australian Stock Exchange and traded at A$7.68 at 10:18 a.m. Sydney time.
A successful Alcoa bid for Alcan could "deliver significant benefits,'' to the Alcoa World Alumina & Chemicals joint venture, Alumina's Chief Financial Officer Ken Dean said today in a statement posted on the Australian Stock Exchange.
The venture is the "exclusive vehicle'' for any bauxite and alumina businesses of Alcoa and Alumina, and Alcan has stakes in a number of bauxite and alumina assets, Dean said. Alumina owns 40 percent of the venture, and Alcoa the rest.
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