Alcoa seen vulnerable after it drops bid for Alcan

US aluminium producer Alcoa said it is dropping its hostile bid for its Canadian peer Alcan after being outgunned by Rio Tinto’s all-cash offer. Rio yesterday announced a US$101 all cash offer, representing a hefty 32.8% premium to that from Alcoa. Its offer has the full support of the Alcan board, which made no secret of its lack of enthusiasm for Alcoa’s move. Alcoa’s chief executive Alain Belda has admitted defeat. “At this price level, we have more attractive options for delivering extra value to shareholders.” “We will continue to deliver strong results, make targeted growth investments, trim under-performing businesses, and further enhance returns to shareholders by resuming our share repurchase program,” he went on to say. The question now is whether Alcoa will be allowed to do so. Ever since announcing its move on Alcan in May, Alcoa has been perceived to be a potential take-over target itself in the event it couldn’t scale up with an Alcan buy. The events of the last 48 hours have left it looking highly vulnerable with the stock markets buzzing with anticipation that a bigger predator may be on the prowl.