Alcan intends to seek rival bidder to counter Alcoa hostile offer

Alcan Inc. (TSX:AL) has won a new long-term agreement to supply European aircraft maker Airbus, a shot across the bow of Airbus supplier Alcoa Inc., which is in the midst of a hostile takeover attempt for its Canadian rival.

The announcement Wednesday came as Alcan reinforced its intention to find another major manufacturer to help it fend off the Alcoa bid, possibly as a "white knight" or in support of an counter-offer.

Christel Bories, Alcan's CEO of engineering products units, said at a news conference in Paris that all options were credible and that the company might be an interesting target for large mining companies who are flush with money, such as Australian mining giant BHP Billiton.

Last month, Alcoa presented a hostile $27-billion cash-and-shares offer for Alcan. Alcan has rejected the bid and chief executive Dick Evans has said the company is talking with third parties about "various other transactions."

Meanwhile, Montreal-based Alcan did not disclose financial terms of the "multi-year" contract with Airbus.

The deal covers a variety of plate, sheet and stringer products, along with small extrusions and tubes for planes including the superjumbo A380 and the new A350 XWB.

The Airbus deal with Alcan comes just over two years after competitor Alcoa, the world's biggest mining company, declared that the first flight of A380 "took with it more new Alcoa products and solutions than any other aircraft in Alcoa's 100-plus years of aviation history."

At that time, Alcoa said it had signed a long-term supply deal with Airbus worth nearly $2 billion. At the same time Alcan described itself as a "major supplier" to the A380 project.

On Wednesday, Alcan shares were ahead 43 cents to $88.16 on the Toronto Stock Exchange, with a 52-week high and low of $94.25 and $41.78.

The company's shares hit the new high on May 28 as speculation mounted about a possible bid by Anglo-Australian mining company Rio Tinto PLC.

Other reports have said Norsk Hydro ASA of Norway was preparing a US$30-billion-plus proposal.

Bear Stearns analyst Anthony Rizzuto Jr. downgraded Alcan's shares Tuesday, saying the company is unlikely to attract a bidder to rival Alcoa.

While other companies could mount counter-offers, he said they may not be able to extract as much value out of Alcan as the American company, once Alcan's parent, could.

Aluminum aviation products have lost some popularity in recent years as the industry shifts to high-technology plastic-based composite materials that promise to reduce weight.

At Airbus competitor Boeing, the 787 Dreamliner now under development will be the first full-size airliner with composite wings and fuselage. The composites will account for about half of the 787's weight, compared with 12 per cent for aluminum.

In the Airbus announcement, Alcan's aerospace and transport operations president Jean-Philippe Cael was positive about aluminum's future in airframes.

"We believe that new alloys, combined with innovative design and joining techniques, will ensure that aluminum applications remain competitive for aerospace structures in the foreseeable future," Cael said.