Alcoa Inc. put Alcan Inc.
in
play last week with a hostile $33 billion bid
for its Canadian rival. Now, with
Asian aluminum firms and potential private equity buyers rumored to be
considering bids of their own, Prudential Equity Group LLC analyst John
Tumazos has a novel suggestion for how to ensure a deal between the two North
American companies: Alcan should buy
Alcoa.
In a research note published Monday,
Tumazos said it would be easier for
Alcan to acquire
Alcoa. Importantly, having
Montreal-based Alcan as the buyer would ensure that the below-market water
rights Alcan enjoys in Quebec and British Columbia, which allows it to
generate cheap energy, would remain in place. Those rights, granted to Alcan
by the Canadian government, could be taken back in the event Alcan is sold.
And given the level of anti-Americanism
festering in Europe, an Alcan purchase could also have an easier time clearing
regulatory hurdles on the Continent.
But why would Alcan, which Alcoa said has
been resisting merger overtures
for
two years now, be interested in
a deal? Tumazos said that now that Alcoa has gone public with its offer and
perhaps attracted bids by Russian aluminum giant Rusal and others, Alcan could
have a change of heart.
"It is very plausible, given the
events now triggered and underway, Alcan might prefer a
combination with Alcoa to one with Rusal, an LBO firm or a diversified
entity," the analyst wrote. —Lou Whiteman
See
story from TheDeal.com
See
Alcoa's press release announcing the offer
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