Investment Firm Says Its Offer Tops Alcoa’s Bid for Reynolds

Reynolds Metals Co. got an all-cash takeover offer from a small investment firm, Michigan Avenue Partners, that rivals a half-cash, half-stock offer from Alcoa Inc., the investment firm said.

The value of the offer for North America’s No. 3 aluminum producer wasn’t disclosed, though Chicago-based Michigan Avenue Partners said its offer beats the Alcoa bid. Alcoa valued its offer at $5.6 billion, without providing additional details. At $65 a share, the deal would be worth only $4.2 billion, based on the number of Reynolds shares outstanding.

Closely held Michigan Avenue Partners has purchased about $1 billion worth of aluminum assets in the last 18 months, including a Reynolds plant. It had gross revenue of $1.7 billion last year, Chairman Michael Lynch said. He said his firm also agreed this week to buy Wells Aluminum Corp. of Baltimore, a maker of processed-aluminum products.

Alcoa, the world’s top aluminum producer, made its offer for Reynolds on Wednesday, hours after Alcoa’s closest competitor, Alcan Aluminium Ltd., agreed to buy French competitor Pechiney and the aluminum and packaging units of Zurich, Switzerland-based Algroup for $9.2 billion in stock.

Many analysts have said Alcoa’s offer was too low and predicted a bidding war. The president of Montreal-based Alcan said Thursday that the company has not ruled out the possibility of making a bid.

Alcoa and Reynolds both declined to comment.

Reynolds officials have refused to comment on the Alcoa offer other than to say the company’s board will meet Sunday to discuss the bid and will issue a statement after the close of business Monday.

Alcoa shares fell $1.25 to close at $66.50 on the New York Stock Exchange.