- The Washington Times - Monday, May 7, 2007

TORONTO (AP) Alcoa Inc., seeking to keep pace with growing Russian rival Rusal, announced a hostile $27 billion bid for Canadian aluminum rival Alcan Inc. yesterday, after failing in almost two years of private talks to negotiate a deal.

Alcan’s U.S. shares rose 34.5 percent, well above the offered price, suggesting investors think the bidding could go higher. Alcoa shares gained 8.3 percent.

Montreal-based Alcan said its board “will consider the proposal” and advised shareholders to await its recommendation.

Alcoa said the proposed cash-and-stock deal would create a premier diversified global aluminum company, which could grow faster than the two companies could on their own.

Alcoa said in announcing the offer that the companies’ talks had reached the board level last fall. The company plans to begin its offer today.

The combined company, with 188,000 employees in 67 countries, would have had revenue last year of $54 billion and earnings of $9.5 billion.

Until recently both companies were the world’s top two producers of aluminum, but they now lag behind Rusal of Moscow. Rusal, its rival Sual and Swiss commodities trader Glencore International AG completed the combination of their assets at the end of March, creating United Company Rusal and surpassing Alcoa as the world’s largest aluminum producer. The Alcan deal would vault Alcoa past Rusal in aluminum production.

Alcoa is offering a combination of cash and stock that it said was worth $73.25 for each Alcan share, a 20 percent premium to Alcan’s closing price Friday of $61.03 and a 32 percent premium to Alcan’s average closing price over the last 30 trading days.

With an estimated 367 million shares outstanding, the offer values Alcan at nearly $27 billion. Alcoa said debt being assumed would boost the total value of the deal to $33 billion.

The bid includes $58.60 a share in cash and 0.4108 of an Alcoa share for each share of Alcan.

Alcan’s U.S. shares rose $21.08 to $82.11 yesterday, while Alcoa shares gained $2.97 to $38.63.



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