Alcoa Plans Hostile Bid After Reynolds Rejects Purchase Offer

Alcoa Inc. said Monday that it planned to launch a hostile $4.2-billion bid for rival Reynolds Metals Co., which rejected a friendly cash-and-stock offer.

Pittsburgh-based Alcoa, the world’s largest producer of aluminum, said it will launch a cash tender offer this week for Reynolds’ 64.4 million outstanding shares, seek to remove the company’s anti-takeover defense and try to oust its 11-member board.

The move came a day after Richmond, Va.-based Reynolds, the No. 3 aluminum producer, rejected Alcoa’s offer as inadequate.

The Reynolds board said in rejecting Alcoa’s bid Sunday that it would explore “all alternatives to maximize shareholder value, including the sale of the company.”

Acquiring Reynolds would allow Alcoa to retain its top spot in the industry. Alcoa said it does not foresee any antitrust problems.

Alcoa said it would file this week with the Securities and Exchange Commission to launch a consent solicitation aimed at removing the Reynolds board and electing a new slate.

Reynolds’ shares, which rose sharply Friday, fell slightly Monday but remained well above the $65 bid price. The shares closed down 44 cents at $68.94 on the New York Stock Exchange.

Alcoa shares closed up 38 cents at $66.88, also on the Big Board.