Alcan pounces for Pechiney

Alcan has announced plans to launch a tender offer for Pechiney in order to solidify its position as one of the world's largest aluminium and packaging companies. The completion of the transaction is expected to create value for the shareholders of both companies.

Alcan believes that the deal will create a broader product portfolio for the business and enhance its market capability.

However, the hostile bid approach has shocked Pechiney, even though Alcan said that it had been in talks with its French counterpart on-and-off over the last year.

While the merger of the two companies would create the world's biggest aluminium packaging company, it is also likely to face stiff opposition from European regulators. A three-way merger between Pechiney, Alcan and Algroup of Switzerland was blocked by European competition authorities in 2000.

But for now, Alcan has conveniently papered over the expected opposition from both Pechiney and Brussels. "This is a win-win offer that maximises value for shareholders and stakeholders of both companies, recognises the strengths of both companies and provides the best option for future growth. I am convinced that Alcan's offer represents an exceptional opportunity for both Pechiney and Alcan and that now is the right time to seize it,"​ said Travis Engen, Alcan's president and CEO.

Egen believes that the combined company will benefit from enhanced scale, financial strength and technological resources as well as its increased capability to serve customers worldwide. Alcan intends to locate the global headquarters of the combined entity's packaging business in Paris and has identified France as the headquarters for its European primary aluminium business.

In addition, Alcan has identified France as the future home for its global centre of excellence for new cell technology development in primary aluminium.

The offer values each Pechiney share at €41, which represents a premium of 28 per cent over the closing price as of 2 July 2003 and 39 per cent over the one-month average. The offer consists of 60 per cent in cash and 40 per cent in new Alcan common shares.

The offer is conditional to government and regulatory authorities as well as the tendering of a 50 per cent minimum of the total diluted number of Pechiney shares to the offer.

Alcan's offer to Pechiney was filed with the market authorities yesterday. Employee representatives of Alcan are currently being given information about the offer. Alcan said it expected the offer to be completed within four or five months, although just how much of Pechiney it will be allowed to keep by the regulators remains to be seen.

Pechiney​ is an international group listed on the Paris and New York stock exchanges. Its three core businesses are primary aluminium, aluminium conversion and packaging. Pechiney achieved sales of €11.9 billion in 2002. It employs 34,000 employees.

Alcan​ is a multinational company and a global leader in aluminum, packaging, and recycling with 2002 revenues of US$12.5 billion. The company employs 54,000 people and has operating facilities in 42 countries.