Alcan mulls response to hostile Alcoa bid

Alcan Inc. said Wednesday it is considering its alternatives to a $28.4 billion hostile takeover offer from Alcoa Inc. but declined to say if a counterbid for its U.S. aluminum rival was one of them.

"The strategic committee continues to look at all options," Alcan spokeswoman Anik Michaud said.

Michaud spoke after a press conference in Paris, during which Christel Bories, president and chief executive of Alcan's Engineered Products Group, was quoted by news agencies as agreeing that a counteroffer for Alcoa or tie-up with a big international miner were among credible options.

Alcan (Charts) has rejected Alcoa's (Charts, Fortune 500) May 7 cash-and-stock offer, which expires July 10 and, based on Alcoa's share price on Wednesday afternoon, was worth $75.20 a share.

Alcoa has said in securities documents that it will likely extend its deadline as it seeks antitrust approval to put the two companies together.

Alcan argues that Alcoa's bid does not reflect the value of the Canadian company's assets, technology and growth prospects.

Meanwhile, its strategic committee of directors, along with its managers and advisers, are looking for alternatives to Alcoa's offer. Alcan is expected to unveil its strategy before the July 10 deadline.

Two options cited by analysts include Alcan finding a white knight in the form of a mining firm, such as BHP Billiton (Charts), or mounting a counterbid for Alcoa.

Bear Stearns analyst Anthony Rizzuto said he does not think prospective suitors for Alcan could match's Alcoa's target of wringing $1 billion of cost cuts out of combining the two companies.

Conversely, he thinks Alcan could make a $50-a-share takeover offer for Alcoa and still be able to boost profits in 2008 if it succeeds in acquiring Alcoa.

Rizzuto cut his rating on Alcan shares to "peer perform" from "outperform," largely because they would probably fall if the Montreal-based company were to bid for Alcoa.

He raised his year-end 2007 price target for Alcoa to $46 from $40.

Alcoa shares were up $1.07, or 2.7 percent, at $40.41 on the New York Stock Exchange Wednesday afternoon.

That matched the rise in BHP Billiton's stock price but lagged the run-up in other mining and metals stocks such as Rio Tinto (Charts) and Anglo American Plc.

Alcan shares were up 77 cents at $83.20 in New York. They climbed 97 Canadian cents to C$88.70 on the Toronto Stock Exchange.

Alcan's Paris press conference was held in the lead-up to next week's International Paris Air Show.

Earlier Wednesday, Alcan said it had signed a long-term agreement to supply Airbus with a variety of high-performance aluminum products for aircraft, including the A380 and A350 XWB. It did not disclose financial terms of the contract.