Alcoa Bid Rejected by Alcan, Stock Hits 52-Week High

Alcan Inc. rejected a $27.4 billion bid from Alcoa Inc. on Tuesday as "inadequate," signaling a higher price may be needed to win acceptance for a takeover that would create the world's largest aluminum company.

"To get this done, Alcoa is going to need to sweeten its bid," Leo Larkin, a metals analyst at Standard & Poor's in New York, said in an interview before today's announcement. "Alcoa is going to do whatever it takes to get this deal done."

The May 7 proposal called for exchanging each Alcan share for $58.60 in cash and 0.4108 of an Alcoa share.

Alcoa made its bid this month after two years of talks failed to lead to a so-called merger of equals. Alcan broke off talks in December, after Chief Executive Officer Richard Evans had preliminarily agreed to be chief executive of the combined company and Alcoa's Alain Belda would be executive chairman, Alcoa said in a regulatory filing.

However, Alcoa cannot be too discouraged over Alcan's decision to reject its bid.  Its stock reached its 52-week high today. Shares were priced as high as $40.65 this morning.