Alcoa reaffirms offer for Alcan as 'full and fair'

NEW YORK : US aluminium giant Alcoa on Wednesday reaffirmed its hostile bid for Canadian rival Alcan, saying the 33-billion-dollar offer was "full and fair."

The announcement by Alcoa came a day after Alcan rejected the offer from the US firm and amid reports that Alcan was in talks with the world's biggest miner, BHP Billiton of Australia, and possibly others.

Alain Belda, Alcoa's chairman and chief executive, said the US giant would continue to press its offer as "the most compelling choice for Alcan's shareholders."

"Alcoa is the most logical partner for Alcan, and our proposed combination is driven by an unquestionable strategic and industrial logic," Belda said in a statement.

"We have studied Alcan's response and have not seen anything that would lead us to re-evaluate our offer. We continue to believe that our offer is full and fair, providing substantial value to Alcan's shareholders. We have already met with a significant number of Alcan's shareholders and are pleased to have received strong support for the combination."

On Tuesday, the board of Alcan board had recommended that shareholders reject the unsolicited offer from Alcoa.

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," Alcan chairman Yves Fortier said.

The firms "have fundamentally different approaches and track records in creating shareholder value," he said.

Alcan said it was "actively building upon existing strategies to develop a full set of highest-value initiatives as well as continuing to explore alternatives consistent with the best interests of Alcan shareholders."

In Canada, the daily Globe and Mail said on Wednesday that Alcan "has entered early-stage discussions with global mining giant BHP Billiton Ltd. as it looks to fend off an unwanted takeover attempt" from Alcoa.

The newspaper said that BHP Billiton had approached Alcan late last year, but had been turned down at the time.

Some analysts said there could be a bidding war for Alcan or that the Canadian firm might even turn the tables on Alcoa with a hostile bid of its own, possibly with a partner.

"It's a little like a mating dance, and the whole idea is to eventually get a better price," said Charles Bradford, an industry analyst with Bradford Research/Soleil Securities in New York.

Kimberly DuBord, analyst at Briefing.com, said that Alcan's board believes the offer does not reflect the true value of the aluminium giant and "the market agrees. Alcan's shares continue to trade above the offer price."

DuBord said the price for Alcan is likely to be in the range of 90 dollars per share, compared with just over 73 dollars offered by Alcoa.

"Given the merger mania occurring globally, rationalising production across a multitude of metals, coupled with producers' flush balance sheets from enduring high commodity prices, we expected rival bidders to step in," she said.