1. Alcan board recommends holders reject Alcoa offer May 22, 2007

NEW YORK-- Alcan Inc. said its board unanimously recommends shareholders reject Alcoa Inc.'s $ 27.45 billion unsolicited offer to acquire the company.
The Montreal aluminum producer said the offer is inadequate in multiple respects and is contrary to the best interests of its shareholders.
Among other things, Alcan's board determined the offer fails to compensate shareholders for the value of the company's asset base, doesn't reflect an adequate premium for control of Alcan, and is highly conditional and subject to significant risks and uncertainties,
"It is clear to us that Alcan and Alcoa have fundamentally different approaches and track records in creating shareholder value. We are convinced that the proposed Alcoa-led acquisition of Alcan is not the right choice for our shareholders," Alcan Chairman Yves Fortier said in a statement.

2. Alcoa seeks antitrust OK for Alcan purchase Jun 6, 2007

SAN FRANCISCO -- Aluminum giant Alcoa Inc., taking the next step in trying to take over reluctant acquisition target Alcan Inc., said Wednesday it had filed with U.S. antitrust authorities to gain approval for the $ 27 billion hostile deal.
"We have a well-developed, detailed roadmap to resolve regulatory issues through targeted divestitures in the appropriate industry segments," said Alain Belda, chief executive of Alcoa, in a statement, adding that the filing "demonstrates our commitment" to promptly satisfy regulatory hurdles.
The company said it had filed notification and report forms with the Federal Trade Commission and the Justice Department, as required under the 1976 Hart-Scott-Rodino Antitrust Improvement Act. Alcoa is seeking to clear U.S. regulators' concerns that an Alcoa-Alcan merger would give the new company too much control over prices of certain products.
A successful completion of Alcoa's May 7 bid for Montreal-based Alcan would solidify Alcoa's spot as the world's largest maker of raw aluminum, with control over 20% of the world market. It would also dominate global markets for aluminum's feedstock alumina, with a 28% share. See full story.
This capacity, plus access to Alcan's low-cost power and production know-how, has made the deal worth pursuing, Alcoa has said -- even after Alcan's board turned down the deal. See story on Alcan's rejection.
New York-based Alcoa has said from the start it would probably have to drop some businesses because of antitrust concerns. These issues dogged Alcoa for the first part of the previous century due to its early dominance in U.S. aluminum markets and contributed to a break-up of the two companies that later became Alcan and Alcoa.
Alcan's roots go back to its formation in 1902 as a subsidiary of the Pittsburgh Reduction Co., later known as Alcoa. Under scrutiny by the FTC and citing organizational reasons, in 1928 Alcoa divested most of its foreign assets and formed Alcan-predecessor Aluminum Limited. Still, Alcoa shareholders owned a large part of the Canadian company's stock.
Then, after a long-running and landmark antitrust case, the U.S. courts in 1951 forced Alcoa's major shareholders to divest themselves of their Alcan holdings, completely separating the two companies.
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U.S. regulators today are more likely to be focused on reduced competition for downstream -- or more finished -- products rather than dominance in primary aluminum and alumina, despite the combined company's predominance in the raw products. That's because the raw metals trade as global commodities where traders, rather than manufacturers, increasingly determines prices.
How much overlap?
Overlaps between the two companies' products are mostly in the aerospace business, Alcoa's Belda has previously said. Plus, there may be a slight overlap in automotive heat exchangers, he said.
And in these markets, the divestitures might end up being less than they seem at first glance, according to Soleil Securities analyst Charles Bradford.
"In aerospace there is some overlap, but even here it's not as much as you might think," said Bradford.
As an example, he noted that although both companies manufacture heat-treated plate for the outside of planes, their specific products differ.
What's more, the increased use of plastics in the bodies of planes -- say, in the new 787 Dreamliner, the fuselage for which Boeing Co. is constructing from a carbon-fiber composite -- means that the market for aircraft parts has expanded beyond the largest aluminum manufacturers. See more on the 787.
Shares of Alcoa, part of the Dow Jones Industrial Average, closed down 1.8%, outpacing the 1% drop in the broader index. Alcan's U.S.-listed shares closed 1% lower. End of Story

3. Alcan rejects Alcoa's latest overtures Jul 3, 2007
SAN FRANCISCO -- Alcan Inc. late last week rejected a series of overtures to get a closer look at the aluminum company's books, despite unwelcome suitor Alcoa Inc.'s suggestion that such access could trigger a higher acquisition offer, regulatory filings showed Tuesday.
In the first of five written exchanges released by Alcoa to the Securities and Exchange Commission, CEO Alain Belda requested access to a "data room" that, according to press reports, Alcan had made available to other parties.
"That information would help us determine whether there is additional value for your shareholders that may be unlocked beyond that which we have already determined," wrote Belda in a June 20 email to Richard Evans, his counterpart at Montreal-based Alcan.

Alcan rejected Alcoa's hostile $ 27 billion offer in late May, saying that the price was too low and that the chances of its success were too uncertain. New York-based Alcoa has nonetheless pushed ahead with the cash-and-stock offer valued at $ 73.25 a share, saying the strategic rationale behind a combination compelled it to approach Alcan shareholders directly. See more on Alcoa-Alcan.
In statements made after rejecting the offer, Alcan has said it's been discussing alternatives with other, unnamed parties. Analysts have said these could include major global miners BHP Billiton, Xstrata Plc, Anglo-American Plc, Rio Tinto and Companhia Vale do Rio Doce.
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A trickle of unsourced media reports about some of these firms' interest in Alcan has fueled speculation of a white-knight bid. On June 20, the Sydney Morning Herald reported Alcan had opened a data room to Rio Tinto and BHP Billiton in an effort to fend off Alcoa's offer.
Two days after Belda's letter, Evans confirmed that Alcan was talking to other parties. In a letter, he suggested Alcoa could also discuss confidential information but said such access would "require the signing of an appropriate confidentiality agreement and standstill."
Alcoa's refusal to sign "standard and reasonable" versions of these agreements was one reason Alcan broke off earlier, privately held talks to merge with its larger rival, Alcan has said. Such talks ended last fall, and Alcoa has also acknowledged difficulty reaching a standstill agreement. These pacts tie a hostile buyer's hands by limiting its purchases of a target's stock.
Last week, Alcoa said it would again consider inking such agreements -- as long as they were in the context of its takeover offer, said Belda in a June 27 letter.
Alcoa's proposal fell flat once more. In Alcan's final correspondence, a June 27 email, Evans said the request had been brought to the attention of the board's strategic committee.
"At this point we see reason to engage in further discussions or correspondence," he wrote.
Alcan's U.S.-listed shares rose 1.7% in Tuesday trading. Alcoa's shares rose 1%.

4. Alcoa mulls choices as Alcan taps Rio Tinto Jul 12, 2007
Credit Suisse maps out possible bid by BHP Billiton for Alcoa
By Laura Mandaro,
Last Update: 3:05 PM ET Jul 12, 2007

SAN FRANCISCO -- Aluminum producer Alcoa Inc. was considering its next move Thursday after takeover target Alcan Inc. decided to merge instead with Rio Tinto, a rejection that leaves Alcoa with just a few choices -- raise its offer, go it alone or get snapped up by another global mining giant, say analysts.
"It wouldn't be out of the realm of possibility to see Alcoa come back with a stronger bid to compete with Rio Tinto," said Brian Hicks, co-portfolio manager of U.S. Global Investors' $ 1.4 billion Global Resources Fund .
"In some respect it's because ... they themselves could become a target," he said.
Alcoa's shares, part of the Dow Jones Industrial Average, notched a new all-time high of $ 46.15 New York Stock Exchange trading and were recently up 6.2% at $ 45.04 in afternoon trading.
U.S.-listed shares of Alcan rallied 10.2% to $ 98.70, while Rio Tinto lost ground, trading down 3.5% to $ 313.
New York-based Alcoa said it plans to issue a statement Thursday about its plans.
"We are reviewing the situation right now," said Alcoa spokesman Kevin Lowery when reached by phone Thursday morning.
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Alcoa last week disclosed it was considering increasing its $ 27 billion cash-and-stock bid for Alcan after Montreal-based Alcan's board rejected the $ 73.25-a-share offer. The deal would have combined North America's two largest aluminum producers.
A higher offer never came through. Then early Thursday, Alcan said it had agreed to accept a rival offer by London-based mining giant Rio Tinto, valued at $ 38.1 billion, or $ 101 a share -- nearly one-third more than Alcoa's offer. See full story.
And Alcan senior executives made clear that, beyond the price, they considered the match-up with Rio Tinto -- which is largely an iron ore and copper miner -- to be far superior.
"It wasn't happily that we entered into this process," Alcan Chairman Yves Fortier told reporters. He said he had met with Rio Tinto Chairman Paul Skinner before Alcoa's May 7 hostile bid and said in response to his counterpart's overtures, "thanks but no thanks."
But Alcan's attitude changed after the Alcoa bid.
"Once it was imposed on us we reaped the benefits," he said.
BHP Billiton next up?
Rio Tinto's offer, which Alcan's board has unanimously backed, ushered in a new round of speculation about Alcoa's future if it fails in its increasingly tough bid for Alcan.
Credit Suisse took a stab at what would happen with BHP Billiton Ltd. if it were to launch an offer for Alcoa. The Australian mining company has been reported to be considering a $ 40 billion takeover bid for Alcoa with help from private equity firms.
Assuming BHP makes an offer that is a 30% premium to Alcoa's Wednesday closing price, or $ 55 a share, and average aluminum prices of $ 1.10 a share in 2008, "we estimate the acquisition of Alcoa could add up to 9% to BHP's earnings," Credit Suisse analysts, led by Jeremy Gray, wrote in a note to investors Thursday. Aluminum and its feedstock alumina would account for one-quarter of BHP operating earnings, up from 7% currently, they said.
A spokesperson for BHP could not be reached for comment.
Other global mining firms may also be eyeing Alcoa, as they seek to spend some of the cash stacked up after a multiyear rise in metals prices. Many analysts think aluminum, the worst performing base metal in the past five years, is poised for a long rally as global consumption, led by China, climbs into the double digits.
Brazil's Companhia Vale do Rio Doce is "in the wings and they could step in and make a bid as well," noted U.S. Global Investors' Hicks. His fund does not own shares in any of the firms mentioned as bidders or targets.
Sweetener?
Or, Alcoa might come out with a higher bid. Analysts say Alcoa has the financial standing to lift its offer, but some estimates of a higher offer have fallen short of Rio Tinto's all-cash bid.
On Tuesday, Friedman Billings Ramsey analyst Amir Arif estimated Alcoa could increase its bid by $ 10 to $ 12 a share, but a higher bid than that could put Alcoa in a tight spot.
For instance, a shareholder vote would be needed if Alcoa's equity dilution increases above 25%, while raising the cash portion would pressure its debt ratios, according to Arif.
And if Alcan pursued a deal with another suitor, Arif wrote Tuesday, this would "increase the chances" of Alcoa itself being acquired at some future point.
There may still be strategic reasons for Alcoa to lodge a counter bid. Alcoa has pursued the Alcan merger to gain access to cheap power and capacity as global producers in countries like Russia similarly bulk up.
An Alcoa-Alcan union would create a company with $ 54 billion in revenue and a lock on the ranking of world's largest producer of aluminum and alumina.
In correspondence made public last week, Alcoa CEO Alain Belda asked Dick Evans, his counterpart at Alcan, for access to private data, saying such information "would help us determine whether there is additional value for your shareholders that may be unlocked beyond that which we have already determined."

5. Alcoa pulls bid for Alcan Jul 12, 2007
CEO says "at this price level" there are better options for company
By Laura Mandaro,
Last Update: 4:42 PM ET Jul 12, 2007

SAN FRANCISCO -- Alcoa Inc. said late Thursday it has withdrawn its $ 27 billion offer for Alcan Inc. after Rio Tinto came forward with a pricier bid, dashing speculation the two metals giants could get into a bidding war over the world's third-largest aluminum producer.
In a statement released shortly after the close of New York trading Thursday, Alcoa CEO Alain Belda said Rio Tinto's offer "strongly reinforces our view of the underlying value in the aluminum industry and its bright prospects for the future."
"However, at this price level, we have more attractive options for delivering additional value to shareholders," he said.
Earlier Thursday, Rio Tinto said Alcan's board had backed its $ 101 a share cash offer for each Alcan share. The offer, worth $ 38 billion in total, topped Alcoa's original offer price by at least $ 25 a share
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New York-based Alcoa said it would restart its share buyback plan, which had been suspended after it launched its hostile offer for Alcan May 7.
Belda said the company would continue to make "targeted growth investments" and trim underperforming businesses.
Alcoa shares rose 1.7% to $ 46.07 in after-hours trading. The stock had closed up 6.7% to $ 45.29 during normal New York trading.
Alcan's shares fell 0.7% to $ 97.80 in after-hours trading. Its shares had risen nearly 10% to $ 98.45 during the day.
After Alcan rejected Alcoa's offer, analysts had speculated Alcoa could raise its cash-and-stock offer. But it faced a ceiling on how high it could raise those shares because of rules governing equity dilution and the pressure a higher bid would place on its debt ratios, said Friedman, Billings, Ramsey & Co.

6.Rio Tinto to buy Alcan for $ 38 billion Jul 12, 2007
Canadian firm says a deal with Alcoa would have carried 'baggage'
By Steve Goldstein & Laura Mandaro,
Last Update: 5:25 PM ET Jul 12, 2007

SAN FRANCISCO -- Rio Tinto said Thursday it reached an agreement to buy Canadian aluminum producer Alcan Inc. for $ 38.1 billion in cash, topping a hostile offer from Alcoa Inc. by roughly a third.
Alcoa, in a brief statement shortly after the closing bell, dropped its bid for Alcan rather than open a bidding war with Rio Tinto. Read full story.
Flush with cash because of a booming global appetite for the metals it extracts, Rio Tinto's making the deal to give itself strong positions in three metals -- iron ore, copper and aluminum -- to meet demand from China's rapidly growing economy, said CEO Tom Albanese.
Rio Tinto offered $ 101 a share -- entirely in cash -- for each share of Alcan (CA:AL: news, chart, profile) , which it says is a 65.5% premium to Alcan's all-time high prior to the Alcoa offer. It's also a premium of 32.8% to Alcoa's cash-and-stock offer, based on Alcoa's July 11 closing price, valued at $ 76.03 for each Alcan share. What's next for Alcoa.
The board of Alcan, which wouldn't even let Alcoa look at its books, unanimously backed the offer from the Anglo-Australian mining giant. Rio Tinto said it hopes to close the deal in the fourth quarter.
With the acquisition, London-based Rio Tinto will become the world's largest aluminum producer, the fourth-largest producer of alumina and the biggest producer of bauxite.
Aluminum last year made up only 10% of Rio Tinto's profits, a share that would rise to 25% just counting raw aluminum and alumina operations.
U.S.-listed shares of Alcan rose nearly 10% to close at $ 98.45 after hitting a new all-time of $ 99.97.
Meanwhile, Rio Tinto's shares slipped 2% to finish at $ 317.71 in New York. And Alcoa shares, part of the Dow Jones Industrial Average, advanced 6.7% to $ 45.29.
The deal culminates an intense push by Alcan's board and management to find another suitor after New York-based Alcoa on May 7 launched its hostile offer, later rejected by Alcan as too low and too uncertain given both aluminum companies' overlaps.
Alcan Chairman Yves Fortier had previously met with his counterpart at Rio Tinto but had politely turned down the mining's executives overtures, he told reporters. But after May 7, Alcan's board started talking again to companies and signed confidentiality agreements with "a number," said executives.
Alcan's board agreed to the Rio Tinto deal late Wednesday afternoon.
The decision to relinquish its independence "was forced on us by the hostile offer by Alcoa," said Fortier. "That was not a journey we had on our platform prior to the 7th of May."
Despite the board's backing, many analysts had been looking for a counter-offer from Alcoa. Those hopes were dashed by Alcoa's decision to quit the race.
Squeezing out savings
Rio Tinto said joining forces with Alcan would result in $ 600 million in savings per year before taxes, less than the $ 1 billion possible through a merger with Alcoa.
That difference was not a deterrent, however. Dick Evans, Alcan's chief executive, pointed out on a call with analysts that he preferred Rio Tinto's bid over even a sweetened bid from Alcoa, which he said carried "baggage" tied to concerns over antitrust clearance and integration.
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Combined, the aluminum products group will be named Rio Tinto Alcan and overtake Alcoa as the world's leading producer of aluminum.
Alcan's packaging business will be put up for sale.
Under the deal's terms, Evans will lead the aluminum group from Montreal and report to Tom Albanese, Rio Tinto's CEO.
"We have committed to build our combined Rio Tinto-Alcan aluminum business around our natural strengths in Canada, Australia and France," Albanese told analysts on a conference call. "Within the wider Rio Tinto group, the deal adds diversity and balance to the very strong earnings of our copper and our iron ore product groups," he said.
To help clinch the deal, Rio Tinto agreed with the government of Quebec to keep its head office in the province in return for water and power rights that the government had previously granted to Alcan.
Rio Tinto, which is halting its stock-buyback program, expects earnings and cash flow per share to rise in the first full year.
Simon Toyne, analyst at the U.K. brokerage Numis Securities, estimated the combined companies will boost Rio Tinto's earnings per share by between 10% and 12%.
Deutsche Bank and CIBC World Markets were the principal advisors to Rio Tinto, with Credit Suisse and Rothschild also providing advice.
Morgan Stanley, J.P. Morgan, UBS and RBC Capital Markets advised Alcan.