Alcoa walks away from Alcan

Johannesburg - Alcoa, the world's second largest aluminium producer, has withdrawn its $28 billion (R194.8 billion) hostile takeover offer for Canadian aluminium company Alcan. The decision to abandon its plans came within hours of mining giant Rio Tinto making public its $38.1 billion offer for Alcan. Rio Tinto's rival offer came with the full endorsement of Alcan's board. Alcoa made an unsolicited offer, which was rejected by Alcan's board in May, after two years of failed merger talks. "At this price level, we have more attractive options for delivering additional value to shareholders," said Alcoa chairman and chief executive officer Alain Belda. He said Alcoa would continue to focus on delivering strong results, making targeted growth investments, trimming under-performing businesses, and further enhancing returns to shareholders by resuming its share repurchase program, which has been re-instituted now that the Alcan offer had been withdrawn. "That is a better path forward for our shareholders, our employees, and our communities," Belda said. Alcoa's board authorised the repurchase of up to 10% of the company's outstanding common stock, or approximately 87 million shares in January this year. BHP Billiton, the world's largest mining group, was this week said to be considering a bid for Alcoa. Alcoa, which employees 116,000 people in 44 countries, is the world's leading producer and manager of primary aluminium, fabricated aluminium and alumina facilities, and is active in all major aspects of the industry. London newspaper The Times said on Tuesday that BHP Billiton had begun talks with private equity firms over a possible $40 billion bid for Alcoa. Brazil's Companhia Vale do Rio Doce and Anglo-Swiss company Xstrata are among the other companies that have been named as possible suitors. The interest in Alcan and Alcoa are evidence of the underlying value in the aluminium industry and as Belsa said, "its bright prospects for the future". The Rio Tinto-Alcan merger will see Alcoa drop from its current position as the world's second largest to the world's third largest aluminium producer.