PITTSBURGH – Alcoa Inc. said it will make an unsolicited offer to acquire Canada’s Alcan Inc. for $73.25 per share in cash and stock, or about $33 billion in enterprise value.
Alcoa said it would initiate the offer for all common shares of Alcan on May 8 and targeted completion of the transaction by the end of 2007. The offer and withdrawal rights are set to expire on July 10, subject to extension.
Alcan recommended its shareholders defer making any decision on the offer until the Alcan board reviewed the proposal.
"With the changing dynamics of our industry over the past decade, we firmly believe that a combination of the two companies will enhance our future competitiveness against increasingly formidable competitors from around the world," said Alcoa chairman and chief executive officer Alain Belda.
The two companies talked about a merger last fall but failed to reach a negotiated agreement, resulting in the hostile takeover bid by Alcoa.
The offer, comprised of $58.60 in cash and 0.4108 of a share of Alcoa common stock based on the May 4 close, represents a 32% premium to Alcan’s average closing price on the New York Stock Exchange over the last 30 trading days and a 20% premium to Alcan’s all-time high closing price on May 4, 2007. The offer is subject to customary conditions, including there having been tendered 66 2/3% of Alcan’s common shares on a fully diluted basis, and receipt of all regulatory approvals, Alcoa said.
The transaction will create a premier diversified global aluminum company with a complementary portfolio of assets and enhanced growth opportunities, and better position the combined company to build value for shareholders, Alcoa said. The new company would have dual head offices in Montreal and New York, with Montreal the headquarters for the global primary products business.
Alcoa said on an aggregate basis for 2006, the combined company would have had revenue of $54 billion. The merger would result in an estimated cost savings of about $1 billion annually, Alcoa said.
Alcoa, based in Pittsburgh, is the world’s leading producer of primary aluminum, fabricated aluminum and alumina facilities. It is a major provider of packaging materials to the food and beverage industries, as well as consumer products, including Reynolds Wrap. Alcoa has 122,000 employees in 44 countries.
Alcan, based in Montreal, is a leading global materials company, including bauxite, alumina and aluminum engineered and packaging products. Including joint ventures, Alcan has 68,000 employees in 61 countries.