Alcoa makes US$27b hostile bid for Alcan

Alcoa, the world’s largest aluminium company, said yesterday it would make a hostile US$27 billion (US$1 = RM3.42) bid for Alcan Inc after discussions between the two companies failed to lead to a deal.

If successful, the bid of US$73.25 per share in cash and stock would create the world’s largest producer of the metal that is used for products ranging from beverage cans to airplanes, cars and heavy machinery parts. Russian rival Rusal is the current volume leader.

The bid represents a 32 per cent premium to Alcan’s average closing price on the New York Stock Exchange over the last 30 trading days.

Alcoa’s move follows nearly two years of merger discussions between the companies that failed to a yield an agreement. It put the enterprise value of the deal at US$33 billion, including US$6 billion in debt.

“We are very disappointed that those efforts did not result in a negotiated transaction — a conclusion we would have strongly preferred,” Alain JP Belda, chairman and chief executive officer of Alcoa, said.

Alcoa expects a merger of the two companies would create cost-savings of US$1 billion per year.

“We believe firmly in the compelling strategic rationale behind the combination of Alcoa and Alcan and are convinced that this transaction creates substantial value for both sets of shareholders and for our customers around the world. We are therefore taking our offer directly to Alcan shareholder s,” he said.

Australian rival BHP Billiton had been cited by analysts as a more likely buyer for Alcan, largely because of difficulties of getting regulators to approve an Alcoa- Alcan link-up.