Alcoa won't raise Alcan bid

Alcoa Inc. is not about to sweeten its hostile bid of $33 billion US for Montreal-based Alcan Inc. even though it has been rejected by Alcan's board, Alcoa's top executive told an industry conference on Monday.

"We think the offer is full," Alcoa CEO Alain Belda told a JP Morgan conference in New York.

On May 7, Alcoa announced a hostile takeover bid for Alcan, a cash-and-stock offer then pegged at $73.45 US per Alcan share. The offer represented a 20 per cent premium on Alcan's previous closing stock price.

"At the moment, we think that is is a full price. It's a significant premium," Belda said.

"I'd hate to have to go higher than that at this point."

Alcan's board has recommended shareholders to reject the bid, saying it is too low, and laden with execution risk because of its many conditions and the complexity of regulatory approvals required.

At the same time, Alcan announced it was in talks with unidentified third parties and that no options had been ruled out, including a "Pac-Man" bid by Alcan in which it would seek to gobble up Alcoa.

For months before Alcoa's bid for Alcan, there was speculation that one or both of the aluminum producers would be swallowed up by the other, or a third party.

On Monday, Belda referred to that speculation, saying there was "already a takeover premium inside the price" on which Alcoa's offer was based.

Alcoa also has "a well-developed detailed road map to solve regulatory issues," he said.

Last month, shares of Alcan Inc. surged to historic highs amid a fresh round of speculation that it was in talks with mining giant BHP Billiton Ltd.. Prices have since settled but remain above Alcoa's original offer.

The names of an array of other suitors from India to Russia to Australia have also been raised as potential suitors.

In related news, Alcan named Montreal-native Brent Hegger as chief executive officer of its proposed Coega aluminum smelter in South Africa. The $ 2.7-billion US project, with a 720,000-tonne capacity, is expected to be completed by 2010.

Hegger's experience, including "the key role he has played in the construction of several aluminum smelters in Africa," make him the natural choice for the job, said Yvon D'Anjou, an Alcan vice-president in the primary metal group.

Alcan also announced it plans to spend about $40 million US to build a cable-manufacturing facility in China to supply specialty alloy cable for commercial, institutional and industrial applications.