Alcan May Take Leverage Action To Stay Independent

It is really getting ugly between aluminum rivals Alcan Inc. and Alcoa Inc. Alcan has denied Alcoa access to confidential financial information, despite the fact that this could lead to a higher bid. Alcan rejected Alcoa's takeover offer in May and the tender offer is set to expire next week. BHP Billiton and Rio Tinto have reportedly been in discussions with Alcan about a possible takeover and allegedly received access to its data room. While it appears that Alcan has no interest in talking with Alcoa, Gimme Credit's Carol Levenson said this is likely 90% posturing. However, the negative tone in letters published by Alcoa between CEOs of both companies, suggests a friendly deal is even more unlikely, the analyst said in a note. Therefore, a higher, all cash deal looks more probable. Ms. Levenson thinks it is unlikely that Alcan will go quietly and will probably try to remain independent through "some 'self-help' leveraging action." This "would reward shareholders and make it less attractive to a foreign buyer," she said, adding that any counteroffer is likely to be funded primarily or entirely with cash.