Alcan Says It Would Bid for Only Parts of Reynolds

The battle for Reynolds Metals Inc. became a bit more complicated as Alcan Aluminium Ltd. disclosed it has no plans to bid for the whole company, but would be interested if Reynolds decided to sell some assets.

Pittsburgh-based Alcoa Inc., the largest aluminum producer, has made a hostile bid worth $65 a share, or about $4.2 billion, for Reynolds, the nation’s third-largest aluminum company. Chicago-based investment group Michigan Avenue Partners has also made a bid, but has not disclosed details other than to say it is higher that Alcoa’s offer.

Reynolds rejected Alcoa’s initial friendly bid Sunday, but has said the company is open to “exploring all alternatives to maximize shareholder value.” Alcoa subsequently took its all-cash bid to shareholders.

Alcan spokesman Marcel Barthe said Wednesday that his company would not participate in the bidding for Reynolds. “Things might evolve differently in the weeks to come if circumstances evolve if the Reynolds assets are not sold in one unit,” Barthe added.

An Alcan offer--even for a part of Reynolds--will not happen any time soon, said J. Clarence Morrison, senior metals analyst at Prudential Securities. The Canadian aluminum maker last week announced its own merger with Pechiney of France and Switzerland’s Alusuisse Lonza Group and has its hands full.

The proposed mergers are taking place near the end of what has been a devastating decade for the aluminum business. The collapse of the Soviet Union, one of the biggest aluminum producers, caused a number of Russian companies to flood the market with aluminum as they sought foreign currency, pushing down prices.

Alcan’s expression of interest does raise the possibility of a spinoff, said Lloyd O’Carroll, an analyst at Scott & Stringfellow in Richmond and former chief economist at Reynolds.

“One of the options in selling Reynolds is to find buyers for all of the various assets and then see whether the total proceeds would be higher than what Alcoa or Michigan Avenue have offered for the whole thing,” O’Carroll said.

Alcan is particularly interested in some of the “crown jewels” of Reynolds’ aluminum assets--two smelters in Canada and a refinery in Australia, O’Carroll said.

Richmond-based Reynolds shares fell 25 cents to close at $68.25 on the New York Stock Exchange.