Alcan board rejects buyout offer from aluminum maker rival Alcoa

Alcan Inc. said May 22 that its board of directors unanimously recommended that shareholders reject Alcoa Inc.'s unsolicited offer to acquire the company, calling the offer inadequate in multiple respects and contrary to the best interests of Alcan's shareholders.

The board recommended that Alcan shareholders not tender any of their shares to Alcoa.

Alcan Chairman Yves Fortier stated in a news release that the Alcoa offer "does not adequately reflect the value of Alcan's extremely attractive assets, strategic capabilities and growth prospects, does not offer an appropriate premium for control of Alcan, and is highly conditional and uncertain. Furthermore, it is clear to us that Alcan and Alcoa have fundamentally different approaches and track records in creating shareholder value. We are convinced that the proposed Alcoa-led acquisition of Alcan is not the right choice for our shareholders."

Montreal-headquartered Alcan has rebuffed past offers from Alcoa, the world's largest aluminum producer, which on May 7 made a cash and stock offer totaling about $33 billion for its rival. Control of several thousand megawatts of power production, mainly in Quebec, controlled by Alcan are at stake in the proposed takeover.

"Despite two years of approaches by Alcoa, at no time was Alcan presented a compelling proposal — either in terms of economics, structure or conditionality — that was in the best interests of our shareholders," Alcan President and CEO Dick Evans said. "Alcan remained disciplined throughout these discussions, insisting on basic safeguards for our shareholders before engaging in substantive negotiations. Alcoa's consistent refusal to agree to standard and reasonable confidentiality and standstill agreements effectively terminated the talks. Alcan's superior performance from both an operating and a share price perspective during this period validates the disciplined process we followed."

A copy of the directors' circular, which provides greater detail about the board's recommendation, is being mailed to all Alcan shareholders.

The financial advisers to Alcan related to this matter include Morgan Stanley and UBS. Alcan has also retained JPMorgan and RBC as additional financial advisers. Alcan's legal advisers are Ogilvy Renault LLP and Sullivan & Cromwell LLP.

Kevin Lowery, a spokesman for Alcoa, did not immediately return phone calls for comment May 22.