Aluminum giants may be combined
US-based Alcoa, the #1 aluminum company in North Americas, has made a $27 billion hostile bid for #2, Canada's Alcan. The opening bid is $27 billion. The combined company would put Alcoa once again as the #1 aluminum producer in the world.
Curiously Alcan was formed as an offshoot of Alcoa early last century when it was forced by antitrust regulators to divest assets. The thinking is now that Alcoa would use the Maytag-Whirlpool merger to argue against any regulatory action, since the company has lots of international competition, especially from Russia and China.
Meanwhile, Alcoa said recently it would sell off much of its packaging and automobile-components operations and that should reduced some antitrust concerns.
Of course, Alcoa is doing this as it fells even bigger mining and metals companies breathing down its neck. That's according to a Wall Street Journal article ("Alcoa Launches Hostile Offer For Alcan Valued at $26.9 Billion", 5/7/07).
Speculation has been building in recent months that BHP Billiton Ltd., Rio Tinto PLC or another mining titan could bid to buy Alcoa or Alcan. Doing so would enable BHP or Rio Tinto to consolidate its position in the growing aluminum market while preventing competitors from snatching up the few remaining blue-chip players at a time of accelerating consolidation in the natural-resources sector.
Aluminum is heating up, like other metals. Earlier this year, Hindalco announced it would acquire Novelis for over $3.6 billion. More recently, Swiss-based Glencore and Russian firm Rusal and Sual merged to form United Company Rusal, the world's #1producer of aluminum. Swiss mining giant Xstrata sold off its aluminum assets.
In the last two years, according to Bloomberg, there have been over $200 billion involved in over a thousand deals in the metals and mining industry. This year threatens to outpace last year's record pace of mergers and acquisitions.
