‘Aluminum Wars’ Seen As Alcan Snubs Alcoa

Alcan’s rejection of a $27.62 billion hostile bid by rival Alcoa is expected to launch
what some are calling the “aluminum wars” and could include rival bids from global mining
giants for either Canada-based Alcan, U.S.-based Alcoa or both.

Meanwhile, Alcoa reaffirmed its cashand- stock bid and gave no sign it plans to increase its offer price. “We have studied Alcan’s response and have not seen anything that would lead us to re-evaluate our offer,” said Alcoa Chairman and Chief Executive Alain Belda.

The market buzzed with rumors surrounding the Alcoa-Alcan situation, with the stocks of both companies trading up on belief that Alcoa’s $75.18 bid for Alcan would be a starting point, rather than a final offer, and that Alcoa might be a takeover target as well.

“Both companies are in play,” said Jim Southwood, a Pittsburgh-based aluminumindustry
consultant with London’s CRU Group. Mining companies around the world are assessing the value of Alcan and the value of Alcoa to determine whether they want all or parts of either company. “Thereare jets in the air,” he said, although there are also obstacles. Any bidders could face
challenges in the Canadian province of Quebec, which provides low-cost power to Alcan.Incorporation laws in the state of Pennsylvania, where Alcoa is incorporated, provide some tools for Alcoa’s board to shield the company from takeover bids.

Belda highlighted Alcoa’s head start in clearing regulatory hurdles related to the deal with Alcan. “We have an aggressive, well-developed plan that recognizes and eliminates potential competitive overlaps and we are confident that we can effectively resolve any regulatory issues,” he said in a statement.