Alcan's board recommends shareholders reject Alcoa offer

By Lisa Kerner

Charlotte, N.C., May 22 - Alcan Inc.'s board of directors unanimously recommended its shareholders reject Alcoa Inc.'s unsolicited offer to acquire the company, calling the offer "inadequate in multiple respects" and "contrary to the best interests of Alcan's shareholders."

In addition, the board recommends that Alcan shareholders not tender any of their shares to Alcoa.

"It 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 board chairman Yves Fortier said of the offer in a company news release.

The company's lead financial adviser has also provided a written opinion that the Alcoa offer is inadequate from a financial point of view. Alcan is advised by Morgan Stanley and UBS regarding the offer. JP Morgan and RBC also advise the company.

Alcoa announced plans to begin a tender offer on May 8 to acquire Alcan 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 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, a company news release stated.

The transaction would be 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.

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.

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