Is the deal good enough? That's the question being asked following Alcoa Inc.'s (NYSE: AA - News) US$73.25 a share hostile takeover bid for Alcan Inc.
"Investors are assessing numerous potential transactions that could include Alcan as a target or break-up candidate," UBS analyst Brian MacArthur said in a note to clients.
As such, he evaluated Alcan's business using a sum of the parts analysis and concluded the company could be worth between US$79 and US$97 a share, adding multiple transactions may have to be overcome before such value is realized.
He raised his target price on Alcan from US$80 to US$87, but given the shares are up nearly 80% in 2007, trading above the Alcoa bid at around US$78.20, he downgraded his rating from "buy" to "neutral."
Meanwhile, Mr. MacArthur said investors who question the Alcan bid, are suggesting Alcoa should be broken up as well.
Based on a similar sum of the parts analysis, he said Alcoa could be worth between US$44 and US$56 a share.
He maintained his "buy" rating and $US46 price target for the stock.
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