Alcan Refuses to Meet Alcoa to Discuss Enhanced Offer

MONTREAL - Aluminium giant Alcan Inc. has rejected an invitation from Alcoa Inc. to discuss the long-awaited improvements to the U.S. rival's C$27-billion takeover bid.

Last week, Alcan CEO Dick Evans wrote to his Alcoa counterpart to spurn Alain Belda's invitation to meet to see ''whether there is additional value for Alcan's shareholders.''

Evans said the invitation was discussed with the strategic committee of Alcan's board.

''At this point we see no reason to engage in further discussions or correspondence,'' Evans wrote in a June 27 e-mail that was filed Tuesday by Alcoa with the U.S. Securities and Exchange Commission.

Belda initiated a series of letters to his Alcan counterpart beginning on June 20 after media reports referred to a data room that Alcan had made available to ''third parties.''

If such a data room existed, he wrote that Alcoa would like access to the information to determine whether additional value for Alcan shareholders might be unlocked.

Two days later, Evans called Belda to discuss the letter. He later informed Belda in writing that Alcan was exploring alternatives ''consistent with the best interests'' of Alcan shareholders, including ongoing discussions with third parties.

Industry observers said they were not surprised by the recent mating dance between the two aluminium companies.

''Typically in a process like this the company that's a target will look to progress the bidding with another acquirer before they go back to the original one,'' said an analyst who didn't want to be named.

Recent reports suggest Alcan has been in discussions with mining companies such as Australian BHP Billton and could be the target of Rio Tinto and Norway's Norsk Hydro.

When Alcan believes it has a competitive bid, it will go back to Alcoa for its best offer, the analyst said.

''So I think the process is actually unfolding largely as we expected.''

With no other bid on the table, Alcoa has been under no pressure to boost its bid, Charles Bradford of New-York based Soleil Securities said last month. It has an US$8 billion cushion and has room to up its ante, he said.

Belda's June 27 letter suggested a meeting in Montreal between representatives of the two companies.

Even after being rebuffed, he reiterated Alcoa's willingness to consider value for Alcan's shareholders beyond the offer.

Alcoa spokesman Kevin Lowery said Alcan had indicated it would discuss the proposed deal further if Pittsburgh-based Alcoa signed confidentiality and standstill agreements. He said Alcoa still hopes to complete the transaction.

Lowery said a standstill agreement is traditionally put in place to help facilitate the conclusion of a deal.

Alcan is discussing its future with several suitors after rejecting Alcoa's cash-and-shares offer.

Anik Michaud, a spokeswoman for Alcan, declined to confirm reports that Alcan had provided documents pertaining to its business to third parties.

''Alcoa had two years to make a compelling offer and they never did,'' Michaud told The Associated Press. ''All we've said so far is we are actively pursuing other alternatives.''

Michaud said she would not rule out anything related to a possible deal, noting that Alcan had established a committee to review all options.

Alcan stock gained C$1.93 or 2.2% to $88.83 in trading Tuesday on the Toronto Stock Exchange.