Alcan rejects Alcoa takeover offer as 'inadequate'

Alcan's board has rejected Alcoa's hostile takeover offer, calling it "inadequate in multiple respects."

Montreal-based Alcan said Tuesday that itis urging its shareholders not to tender their shares to its rival's offer.

"[The Alcoa offer] does not adequately reflect the value of Alcan's extremely attractive assets, strategic capabilities and growth prospects, does not offer an appropriate premium for control of Alcan, and is highly conditional and uncertain," Alcan chairman Yves Fortier said in a statement released after the markets closed.

"Furthermore, it is clear to us that Alcan and Alcoa have fundamentally different approaches and track records in creating shareholder value," Fortier said.

Alcan also said its lead financial adviser had declared the Alcoa offer to be "inadequate" from a financial point of view.

New York-based Alcoafirst approached Alcan in 2005 about joining the two companies together. But Alcan's acting CEO, Dick Evans, said the U.S. company never made the case.

"Despite two years of approaches by Alcoa, at no time was Alcan presented a compelling proposal — either in terms of economics, structure or conditionality — that was in the best interests of our shareholders," he said.

Alcoa launched a $33-billion US bid for Alcanearlier in May. The offer was for $58.60 US in cash, plus 0.4108 of an Alcoa share for each Alcan share.

At current prices, that offer would value Alcan at $75 US a share.

Since Alcan shares closed Tuesday at $81.03 US in NYSE trading,the market is clearly expecting either a higher offer from Alcoa or perhaps another bid from a third aluminum producer.

The Canadian aluminum company said it would continue to explore alternatives that would benefit its investors.

"When [shares] go up above the bid price, I think it clearly says there are higher value alternatives available to the company than the bid that's on the table," Evans said.

After news of the rejection of Alcoa's offer, Alcan shares jumpedanother $2 US in after-hours trading.