Bid by Alcoa to bring Alcan back into family

Alcoa, the world's largest aluminium company, plans to offer cash and stock valued at $US33 billion ($A40 billion) to acquire Alcan.

Alcoa, based in New York, will offer $US58.60 in cash and 0.4108 of a share for each Alcan share. That values Alcan at $US73.25, a 20 per cent premium to the closing price on Friday.

Alcoa's move on Alcan amounts to the group reclaiming its heritage. US anti-trust authorities split Alcoa into what is now Alcoa and Alcan in the 1950s.

And judging by recent actions in the European Union, an Alcoa enlarged by the acquisition of Alcan would again have to jettison some assets before receiving approvals.

That brings into play several Australian assets, with Alcoa dominant in the West Australian alumina industry and Alcan the sole owner of the Gove operation in the Northern Territory.

Alcoa's move follows speculation that BHP Billiton and Rio Tinto had the former king of the aluminium industry in their sights. BHP and Rio have demonstrated their desire to get bigger in the business by plunging into African bauxite/alumina opportunities. But the aggressive nature of the Alcan bid raises the prospect that the Canadian-based Alcan could turn to BHP or Rio to make higher offers.

Poorly performed Alcoa has responded to the BHP and Rio takeover talk by flagging the sale of its downstream fabrication assets and now to be an acquirer in its own right.

"This offer follows almost two years of discussions between our companies regarding a variety of potential business combination transactions, including unsuccessful board-level discussions of a merger last fall," Alcoa chief executive Alain Belda said in a statement.

"We are very disappointed that those efforts did not result in a negotiated transaction."