Alcoa Bids For Canadian Aluminum Rival

Alcan and Alcoa logos over rolls of aluminum
AP / CBS
Alcoa Inc. is making an unsolicited offer for Canadian aluminum rival Alcan Inc. worth nearly $27 billion after failing to reach a negotiated deal in almost two years of private talks.

Alcoa said the proposed cash-and-stock deal would create a premier diversified global aluminum company which could grow faster than the two companies could on their own.

The combined company, with 188,000 employees in 67 countries, would have had revenue last year of $54 billion and earnings before interest, taxes, depreciation and amortization of $9.5 billion.

The company sees annual costs savings of about $1 billion pretax from its proposed combination with Alcan in the third year after the close.

The company is offering a combination of cash and stock that it said was worth $73.25 for each Alcan share, a 20 percent premium to Alcan's closing price Friday of $61.03 and a 32 percent premium to Alcan's average closing price over the last 30 trading days.

The bid includes $58.60 a share in cash and 0.4108 of an Alcoa share for each shares of Montreal-based Alcan.

With about 367 million shares outstanding, that values Alcan at nearly $27 billion. Alcoa said debt being assumed would boost the total value of the deal to $33 billion.

Alcoa said in announcing the offer on Monday that the companies have been in talks to do a deal for almost two years, including merger talks at the board level last fall. Alcoa decided to take its offer directly to shareholders due to the companies' inability to reach a negotiated deal.

Alcoa expects to begin its offer on Tuesday.