Will major shareholder Highfields Capital force Alcoa to put itself up for bid?

World third largest aluminum producer Alcoa's largest major shareholder, Highfields Capital Management, is now gearing up to acquire up to 8 percent of the company. Highfields has apparently notified Alcoa that the fund filed with the FTC under the Hart Scott Rodino Act of its intention to increase its Alcoa shareholdings from nearly 2% to 8%. The Boston-based Highfields was a 6% shareholder of Reynolds Aluminum when the fund originally opposed Alcoa' successful takeover of Reynolds in 1999. Highfields had pushed for the Reynolds board to seek the best offer possible. Highfields Capital has a reputation of fostering mergers to raise share prices. For instance, Highland was mostly recently a shareholder of Metallica Resources, which was merged in a three-way deal into New Gold. In a news release Monday, Alcoa CEO Klaus Kleinfeld announced, "In the course of our meetings with major investors, we have met with the senior management of Highfields and believe we understand their views. We are committed to generating shareholder value and have a detailed plan in place to deliver profitable growth, leverage the Alcoa advantage, and execute in a disciplined and rigorous manner." On July 11, Alcoa announced it would cut more than 1,200 jobs or 11% of its total combined workforce in Mexico and Honduras because of weak demand from the North American automobile market. The company said its electrical and electronics systems had begun restructuring operations. On July 8th, Alcoa reported a 24% drop in second-quarter earnings due to higher production costs. Net income dropped to $546 million or 66-cents per share, compared to $715 million or 81-cents/sh reported during the same quarter of 2007. Meanwhile, a year ago, Alcoa was forced to drop its takeover bid for Canada's Alcan Aluminum after Rio Tinto successfully made a $38.1 billion bid for Alcan. Alcoa shares closed at $32.66, up 85-cents from the previous close. For the past year, the stock has traded in the range of $26.69 to $44.77. Source: Mineweb