Alcan to expand Montreal headquarters complex

MONTREAL - Alcan Inc. said on Monday it would spend up to $50 million to expand and modernize its Montreal office, part of its promise to the Quebec government to keep its headquarters in the Canadian province.

The company's head office requirements have grown since 2000 as the company tripled in size through its acquisition of aluminum rivals Alusuisse of Switzerland and Pechiney of France.

The plan to consolidate Alcan's downtown head office into one campus for 800 people calls for the renovation of its current complex and the renovation of buildings acquired from the Salvation Army, including the evangelical organization's 18,000-square-foot sanctuary, a building built in 1907.

Alcan has 65,000 employees worldwide.

Alcan's commitment to keep its head office in Montreal stems in part from a plan unveiled just weeks earlier to spend up to $1.8 billion over 10 years to add 450,000 tonnes of aluminum smelting capacity to its Quebec operations.

The Quebec smelter initiative would benefit from a $355 million interest-free loan from the provincial government and some $100 million of tax credits.

Quebec officials said the province's financial backing and Alcan's water rights on a river used to generate electricity at its aluminum smelting complex in the province's Saguenay region hinge on the big company maintaining its head office in Montreal.

Dick Evans, president and chief executive of Alcan, said the company's commitments to Quebec and other benefits such as water rights and a preferential power rate reserved for big industries do not amount to a "poison pill" preventing Alcan from being taken over on the open market.

"It does not preclude someone from buying up or taking it over. It does set certain conditions on what that buyer would have to meet in order to do that," Evans told reporters.

There was market speculation earlier this year that Alcan, which has a market capitalization of about $18.3 billion and is widely-held, could become a takeover target for larger global miners.

"The takeover talk has trailed off significantly as our stock has outperformed some of our major competitors over the last six months," Evans said.

Meantime, Alcan is focused on profitable growth in Canada and elsewhere, Evans said.

Alcan's $1.8 billion expansion and modernization of its aluminum smelter at Kitimat, British Columbia, is under question after a provincial agency rejected the company's agreement to sell surplus hydro-electric power to BC Hydro.

Although the B.C government was in favor of the power pact, the B.C. Utilities Commission balked at the market price government-owned BC Hydro would have to pay for power from Alcan.

Evans said Alcan was still waiting for the commission to indicate its reasons for the decision, but he suggested the Montreal company might be open to alternative proposals.

"There are always multiple solutions to opportunities like this," Evans said.

Alcan shares rose 37 Canadian cents to close at C$58.62 on the Toronto Stock Exchange on Monday.