Alcoa Inc. (NYSE:AA) hasreaffirmed its pending offer to acquire all outstanding common shares of Alcan Inc. (TSX:AL)(NYSE:AL) for US$58.60 in cash and 0.4108 of a share of Alcoa common stock as the most compelling choice for Alcan’s shareholders.
Commenting on the Directors' Circular filed by Alcan’s Board of Directors yesterday, Alain J.P. Belda, Alcoa's Chairman and Chief Executive Officer said, "We are pleased that Alcan recognizes both the strategic rationale of this combination, and the unique opportunity to achieve US$1 billion in annual synergies. Alcoa is the most logical partner for Alcan, and our proposed combination is driven by an unquestionable strategic and industrial logic. We have studied Alcan’s response and have not seen anything that would lead us to reevaluate our offer. We continue to believe that our offer is full and fair, providing substantial value to Alcan’s shareholders. We have already met with a significant number of Alcan’s shareholders and are pleased to have received strong support for the combination.”
Based on Alcoa’s closing price on May 22, 2007, the Alcoa offer has a value of US$74.60 per Alcan common share, a 35% premium to Alcan’s average closing share price on the NYSE over the 30 trading days through May 4, 2007, the last trading day prior to announcement of the offer, and a 22% premium to Alcan’s closing price on May 4, 2007, its all-time high prior to the announcement of Alcoa’s offer. The Alcoa offer provides Alcan shareholders with the certainty of a significant cash payment, plus a share of the combined company’s upside through ownership in the world’s premier fully integrated aluminum company.
“We are pleased that Alcan has recognized the US$1 billion in annual pre-tax synergies that can be realized from this combination. We are confident that this level of synergies can only be realized by combining our two companies due to their complementary fit. We are also confident that we can realize these synergies while also meeting the requirements of Alcan’s Continuity Agreement with the Government of Québec and obtaining necessary regulatory approvals,” continued Mr. Belda.
“We are prepared to move forward as quickly as possible to address the remaining conditions to our offer. 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. We have commenced discussions with competition authorities in the U.S., Canada and Europe, as well as other jurisdictions, and are developing our formal submissions to competition authorities. We are also confident that we can demonstrate to regulators the pro-competitive benefits of this combination.”
“Alcan has noted that important conditions to any acquisition of the company are the satisfaction of the terms of Alcan’s Continuity Agreement with the Government of Québec and review under the Investment Canada Act. We are uniquely capable of making the commitments required to meet and exceed these conditions. As outlined in our letter to Alcan’s Board of Directors on May 17, 2007, we are confident we have already met and exceeded the conditions under the Continuity Agreement and continue to believe that Alcan’s Board of Directors should immediately begin its review of Alcoa’s submissions.”
Mr. Belda concluded, “Both companies’ shareholders understand that today’s rapidly changing industry landscape underscores the strategic imperative and logic of this combination. The proposed transaction addresses the long-term challenges posed by competitors emerging in Russia, China, India and the Middle East. Together, Alcoa and Alcan will create a premier aluminum company with a strong, complementary portfolio of businesses. We will benefit from an optimized portfolio of upstream assets, enhanced capacity for growth,
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