Alcoa Inc.'s $33 billion hostile bid for rival Alcan Inc. of Montreal has been trumped by mining major Rio Tinto plc of London, whose officials have offered Alcan $101 per share, valuing the company at $38 billion.
Terms of the proposed all-cash buyout call for Alcan to divest its $6 billion packaging business, which includes plastics packaging for meat, cheese and cosmetics.
Alcoa made its bid for Alcan in May, in an effort to combine their key aluminum assets. At that time, analysts said the offer foreshadowed the divestiture of both firms' plastics assets, which are noncore for the aluminum majors.
The divestiture of Alcan Packaging will have a positive effect on the fragmented packaging sector, according to Ghansham Panjabi, an analyst with Wachovia Capital Markets LLC of New York.
``While the Alcoa/Alcan/Rio Tinto drama will likely last through the summer at the very least, our view is that, in the interim, the pure-play packagers will likely be able to consolidate these assets as they become available, or at the very least capitalize on the uncertainty by cherry-picking market share from both Alcoa and Alcan Packaging,'' Panjabi said July 12 by telephone.
On July 9, Alcoa extended the expiration time for its offer from July 10 to Aug. 10. However, Alcoa announced July 12 that it had withdrawn the bid in response to Rio Tinto's offer.
``At this price level, we have more attractive options for delivering additional value to shareholders,'' Alcoa Chairman and Chief Executive Officer Alain Belda said in a news release.
``We will continue to deliver strong results, make targeted growth investments, trim underperforming businesses and further enhance returns to shareholders by resuming our share-repurchase program,'' Belda said.
Alcoa spokesman Kevin Lowery said the firm expects to complete a review of its packaging assets by year's end.