Pechiney snubs Alcan sweetener (September 02, 2003)

Alcan (AL-T) has taken a sweetened takeover bid for Pechiney off the table after the French rival roundly rejected the bid as too low.

The French aluminum maker says the revised bid of 47-48 euro per share, “”constitutes an improvement of the terms of Alcan’s offer, but continues to fall short of Pechiney’s true strategic value, especially in light of the positive recent market trends relating to the euro/dollar exchange rate and the aluminium price.”

Alcan’s revised proposal was conditional upon approval by Pechiney’s board.

Despite tipping its hand, Alcan says it remains confident that its original offer of three of its own shares plus 123 euros in cash for every five Pechiney shares will succeed. Alcan’s bid includes two subsidiary offers — a cash offer of 41 euros per Pechiney share, and another comprising three Alcan shares in exchange for two Pechiney shares.

Based on Alcan’s closing share price in New York on Aug. 29, the bid is worth around 44.50 euro per Pechiney share.

Alcan recently formally submitted its bid for Pechiney to the European Commission. The company also submitted commitments to European markets for aluminum flat-rolled products, aerosol units and cartridges.

Competition regulators are expected to decide by Sept. 29 whether to approve Alcan’s initial bid or subject it to a full four-month review. Alcan has said that it will abandon its bid if regulators insist on the extended review.

Alcan’s bid also needs the go-ahead from France’s Economy Ministry since Pechiney is major supplier to the country’s aerospace and defence industry.

Alcan still hopes to wrap up the proposed acquisition by mid-October.

Alcan shares were trading 9 lower at $50.14 in mid-afternoon in Toronto on Sept. 2. The shares hit $51 in early trading, near a 52-week high of 51.65. In France, shares in Pechiney closed up 1.75% at 47 euro on Sept. 1.