Alcoa seeks to acquire Alcan for $27 billion
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Manufacturing News, Source : The Manufacturer US
Published : 11 May 2007 18:19
Alcoa Inc. announced Monday that it will offer to acquire all outstanding common shares of Alcan Inc., its Canadian counterpart, for $58.60 in cash and 0.4108 share of Alcoa stock for each outstanding share of Alcan. If successful, the merger would create the world’s largest producer of aluminum, which is used in products ranging from beer cans to bombers. The merger would actually be a reunion, since Alcoa was split into Alcan and Alcoa back in the 1920s due to antitrust concerns.
Commenting on the offer, Alain Belda, chairman and CEO of Alcoa, said that the move comes after nearly two years of discussions between the companies ended in November without an agreement being reached. “We are very disappointed that those efforts did not result in a negotiated transaction—a conclusion we would have strongly preferred,” said Belda. “We are therefore taking our offer directly to Alcan shareholders.”
“Alcoa has completed a number of large acquisitions in recent years, and we have a proven track record of successfully integrating companies to generate shareholder value,” continued Belda. “The combination of Alcoa and Alcan will significantly deepen an already extensive commitment by both companies to Canada, and it will ensure that Canada remains a world leader in the mining and metals industry.”
Alcoa expects the combination to generate pre-tax cost synergies of approximately $1 billion annually, beginning the third year after closing, and add cash flow and earnings per share in the first year. The combined company would have about 188,000 employees in 67 countries. Alcoa is targeting completion of the transaction by the end of 2007.
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