By Lisa Kerner
Charlotte, N.C., May 7 - Alcoa Inc. said it plans to begin a tender offer on May 8 to acquire Alcan Inc. for $58.60 per share in cash plus 0.4108 of a share of Alcoa common stock in a deal valued at an estimated $33 billion, or $73.25 per share.
The per share price is a 32% premium to Alcan's average closing price over the last 30 trading days and a 20% premium to Alcan's closing price on May 4, its all-time high, according to a company news release.
The offer and rights withdrawal are slated to expire at 5 p.m. ET on July 10, with the deal expected to close by the end of 2007.
At least 66 2/3% of Alcan's common shares must be tendered as a condition of the offer.
Alcan's board of directors said it will consider Alcoa's proposal as well as its impact on shareholder and stakeholder interests. The company said it advises its shareholders to defer making any decision until the board has fully reviewed the offer and made a formal recommendation.
"This offer follows almost two years of discussions between our companies regarding a variety of potential business combination transactions, including unsuccessful board-level discussions of a merger transaction last fall," Alcoa chairman and chief executive officer Alain J.P. Belda stated in the release.
"We are very disappointed that those efforts did not result in a negotiated transaction - a conclusion we would have strongly preferred. We believe firmly in the compelling strategic rationale behind the combination of Alcoa and Alcan and are convinced that this transaction creates substantial value for both sets of shareholders and for our customers around the world. We are therefore taking our offer directly to Alcan shareholders."
Belda said the new company will have dual head offices in Montreal and New York, with strategic management functions located in each city.
In addition, Alcoa is committed to growing the combined company's presence in Canada, particularly in Quebec and British Columbia, with a number of strategic head office functions being transferred to Montreal.
The transaction is subject to review by antitrust authorities in several various jurisdictions including the United States, Canada, the European Union, Australia and Brazil, as well as foreign investment clearance in Canada, France and Australia.
Citi, Goldman Sachs Credit Partners LP and Goldman Sachs Canada Credit Partners Co. committed to fully finance the proposed transaction. Skadden, Arps, Slate, Meagher & Flom LLP, Stikeman Elliott LLP, and Cleary Gottlieb Steen and Hamilton LLP are acting as legal counsel to Alcoa. Citi, Goldman, Sachs & Co., BMO Capital Markets, and Lehman Brothers are acting as the company's financial advisers.
Alcoa is a New York-based aluminum manufacturer with 122,000 employees in 44 countries.
Montreal-based Alcan is a global materials company specializing in bauxite mining, alumina processing, primary metal smelting, power generation, aluminum fabrication, engineered solutions and specialty packaging.
| Acquirer: | Alcoa Inc.
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| Target: | Alcan Inc.
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| Transaction value: | $33 billion
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| Price per share: | $58.60 per share in cash plus 0.4108 of a share of Alcoa common stock, or about $73.25 per share.
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| Announcement date: | May 7
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| Expected closing: | By end of 2007
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| Stock price for acquirer: | NYSE: AA; $35.66 on May 4
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| Stock price for target: | NYSE: AL; $61.03 on May 4
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