Fresh Alcan bid expected

The market awaited a counteroffer to Alcoa’s $28,4bn hostile bid for the big Canadian aluminium maker Alcan yesterday.

Alcan’s shares rose 6% on Wednesday on speculation that a counteroffer could emerge.

Alcan rejected the offer on Tuesday that would create the world’s largest producer of the metal, which is used in products ranging from beverage cans to aeroplanes, and said it was in talks with third parties.

“A lengthy delay of this deal would grant another company sufficient time to review its options and launch a counterbid,” said John Redstone, an analyst at Desjardins Securities, in a research report.

He said there was a 50% chance of a counterbid for Alcan, as Alcoa’s May 7 offer would probably take several months to gain approval from antitrust authorities.

Shares in Alcan gained 6% to $85,89 on the New York Stock Exchange yesterday — 14% higher than Alcoa’s cash-and-stock offer of $75,18 a share. In Toronto, Alcan rose by C$4,28 to a new high of C$92,50.

Alcoa CE Alain Belda said the company was prepared to move forward as quickly as possible to address the remaining conditions to the offer.

“We have an aggressive, well-developed plan that recognises and eliminates potential competitive overlaps and we are confident that we can effectively resolve any regulatory issues,” he said in a statement, after the markets closed on Wednesday. Alcoa shares rose by $1,42 (3,6%) to close at $40,37 in New York.

Alcoa expects to extend its offer for Alcan, which expires on July 10, from time to time to accommodate the longer period needed to fulfil the offer’s conditions.

Alcoa was offering $58,60 a share, plus 0,4108 of its shares, for Alcan and said that it had begun discussions on its proposal with antitrust authorities in the US, Canada and Europe.

“Maybe Alcoa thinks there is no one else serious on the horizon so they try a first round and then come back with another offer,” said Commonwealth Securities of Australia analyst Martin Petch.