Alcoa goes hostile in $33bn bid for Alcan

Alcoa sought to create the world's largest aluminium group yesterday as it launched a US$33 billion (£16.5 billion) hostile bid for Alcan, its Canadian rival, after friendly merger talks between the pair broke down.

The US aluminium giant said that it would pay $73.25 a share for Alcan in a move that would propel the unified company to the No 1 slot, surpassing RusAl, of Russia, as the world's biggest aluminium producer with annual production of 7.8 million tonnes.

The bid comes amid consolidation in the global metals and mining industry. Last year Xstrata and CVRD clinched protracted acquisitions worth $17 billion and $19 billion and RusAl snapped up Sual, its rival, for $30 billion.

The move is viewed as a defensive strike by Alcoa, which is widely seen as a takeover target. This year sources told The Times that BHP Billiton and Rio Tinto, the Anglo-Australian mining giants, were separately weighing up offers for Alcoa. The pair could also emerge as rival bidders for Alcan.

Alcan did not immediately reject Alcoa's offer, however, and advised investors to wait until management had reviewed the bid. The bid values Alcan at about $26 billion, excluding the Canadian company's $6 billion of debt.

Alcoa's hostile move comes after almost two years of merger talks between the two companies. Alcoa expressed regret that it was unable to forge a friendly deal but underscored its determination to complete the merger.

"We are very disappointed that those efforts did not result in a negotiated transaction — a conclusion we would have strongly preferred," Alain Belda, Alcoa's chairman and chief executive, said.

He added that he and Dick Evans, Alcan's chief executive, had identified assets to divest to clear any regulatory objections to a deal during the past two years' talks.

The bid of $58.60 in cash and 0.4108 cents per share of Alcoa common stock is at a 32 per cent premium over Alcan's average closing price on the New York Stock Exchange during the past 30 trading days.

Alcan shares surged more than 33 per cent to $81.54 on Wall Street and by 20 per cent to C$87.47 on the Toronto stock exchange. Alcoa shares gained 1.9 per cent to $37.57 in New York.