US aluminium company Alcoa has launched a hostile takeover for its Canadian rival Alcan. It is offering almost 20 billion euros in cash and stock and would assume 4.4 billion euros in debt. The unsolicited bid follows nearly two years of talks between the two companies which has failed to produce an merger agreement. Alcan’s shares jumped over 30%.
The current leading producer – with four million metric tons a year – is Russia’s Rusal. In March it took the top spot when it linked up with its Russian rival Sual and the assets of Swiss based Glencore. Alcoa and Alcan together would easily beat that with combined annual output of over seven million tons.
However, such a merger would raise competition issues in the United States, Canada, Europe, Brazil and Australia. Alcoa said it is prepared to sell assets to get around that. It believes that by 2010 nearly three quarters of a billion euros of savings per year could be achieved by putting the two companies together. Alcan’s management said it will consider the proposal and advised shareholders to wait until it has fully reviewed the offer.