Earnings Preview: Alcan

Canadian aluminum producer Alcan Inc. reports earnings for the fiscal second quarter Tuesday. The following is a summary of key developments and analyst opinion related to the period. OVERVIEW: Alcan was the focus of a lively takeover battle during the quarter, which was resolved July 12. The company agreed to be acquired by mining company Rio Tinto for $38.1 billion, or $101 per share, in an all-cash deal. Alcan's shares skyrocketed in recent months, after rival U.S. aluminum producer Alcoa Inc. launched a hostile $27 billion cash-and-stock bid for the company on May 7. The two companies had failed after almost two years of private talks to reach a negotiated deal. Alcan quickly rejected the offer, saying the bid undervalued the company. A few weeks later, media reports said Rio Tinto was eyeing Alcan. After Rio Tinto trumped the hostile offer, Alcoa abandoned its efforts. BY THE NUMBERS: Analysts expect Alcan to say it earned $1.71 per share in the quarter, on $6.46 billion in revenue, according to a poll conducted by Thomson Financial. ANALYST TAKE: Bear Stearns analyst Anthony B. Rizzuto Jr., in a recent client note, reiterated a "Peer Perform" rating on Alcan, citing its high share price. He trimmed his second-quarter earnings estimate to $1.68 per share from $1.75 per share, "largely to reflect the significant change in various currencies during quarter, particularly the Canadian and Australian dollars." He said he thinks the Rio Tinto-Alcan bid is unlikely to see any major regulatory hurdles. WHAT'S AHEAD: Under terms of the buyout deal, a new company named Rio Tinto Alcan would be based in Montreal, Canada. The transaction is expected to close by the end of the year. "This transaction combines two leading and complementary aluminum businesses, and is a further step in Rio Tinto's strategy of creating shareholder value through investing in high quality, large scale, low cost and long life assets in attractive sectors," Rio Tinto chairman Paul Skinner said in a statement.