French aluminum producer Pechiney has accepted a new sweetened takeover offer from Alcan (AL-T).
The new cash-and-share offer worth 47.50 euro per share includes a bonus of 1 euro per share provided that 95% of the French rival’s shares are tendered. Including the bonus, the deal values Pechiney at about 4 billion euro. Alcan is offering 24.60 euro in cash plus 22.90 euro worth of its shares for each Pechiney share tendered.
Alcan is also offering 83.4 euros in cash for each of Pechiney’s convertible bonds (OCEANE). If 95% of them were turned in, bondholders would get an extra 0.40 euro per bond. Finally, shareholders tendering Pechiney Bonus Allocation Rights would get an additional 0.10 euro per right.
The new bid tops Alcan’s original July bid valued at 41 euro per share at the time, and a subsequent proposal of 47-48 euro per share, both of which were immediately shot down as too low for Pechiney.
The revised offer is conditional on more than half of Pechiney’s shareholders giving the thumbs up, and approval by competition authorities in the European Union and United States. Alcan will file the revised offer with securities regulators by Sept. 16. The European Commission is expected to deliver its decision by Sept. 29. Alcan has said it will drop its bid if regulators insist on a full 4-month review.
The commission previously blocked a merger between the two in 2000. That deal was part of a larger three-way deal that in the end saw Alcan swallow up Swiss group Alusuisse Lonza (Algroup).
This time around, Alcan has agreed to make concessions aimed at appeasing the commission, including the sale of up to 5% of the combined entity’s potential sales. Those assets include Alcan’s half-owned AluNorf rolling mill (the balance of which is owned by Norsk Hydro) in Germany or Pechiney’s Neuf-Brisach rolling mill in France.
The control of these two mills, together with Alcan’s refusal to sell off control in either, was seen as a major stumbling block in its last attempt to join forces with Pechiney. Alcan has also said it would also sell some of its packaging assets, if regulators deem it necessary.
France’s Finance Ministry recently granted Alcan permission to proceed with its bid after considering Pechiney’s role in the French defence sector.
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