Alcoa to Alcan: We’re not askin’
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Manufacturing News, Source : The Manufacturer US
Published : 22 May 2007 20:46
Alcoa grew “tired of talking,” in the words of Chief Executive Alain Belda, in its bid to acquire Alcan. Pittsburgh-based Alcoa announced a $32.5 billion hostile bid for Alcan, its Canadian rival.
The companies had been in negotiations at the board level for two years, never reaching concensus.
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.
As of this writing, no other bids are on the table for Alcan, but seem likely. As Forbes Magazine reports, Alcan's assets and fundamentals are “catching the eye of shoppers.” "We believe that Alcan's low-cost power assets, and hence low-cost smelting system, along with its strong free cash flow, could make it an attractive target for other industry players," wrote RBC Capital Markets analyst H. Fraser Phillips in a client note.
Alcan stockholders may prove as reticent as the board—the $58.60 in cash and 0.4108 share seems a tad cheap to the analyst community, and two thirds of Alcoa stockholders would have to bite. Still, Alcoa is steaming ahead, pushing past the Alcan board to the Government of Québec. Alcoa reviewed Alcan’s continuity agreement with Québec, which identifies the requirements that Alcoa must meet regarding Alcan’s future operations in the Province in order to maintain Alcan’s hydroelectric and water rights. In a letter to the Alcan Board of Directors, Alcoa outlined the ways in which its offer to acquire Alcan exceeds the agreement’s requirements. Alcoa believes Québec will enjoy a “substantially enhanced position in the world aluminum industry,” and reinforce Québec as an important industrial center.
A busy month for Alcoa: five days after it announced its takeover bid, Alcoa was named one of the World’s Most Ethical Companies by Ethisphere Magazine, a national publication dedicated to “illuminating the important correlation between ethics and profit.”
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