Alcoa makes offer for Alcan

Alcoa Inc., seeking to keep pace with growing Russian rival Rusal, launched a hostile $27-billion bid for Canadian aluminum rival Alcan Inc. on Monday after failing in almost two years of private talks to reach a negotiated deal.

Alcan’s U.S. shares jumped 35%, well above the offered price, suggesting that investors think the bidding could go higher. Shares of Pittsburgh-based Alcoa gained 8.3%.

Montreal-based Alcan said its board would consider the proposal and advised shareholders to await its recommendation.

Alcoa said the proposed cash-and-stock deal would create a premier diversified global aluminum company that could grow faster than the two companies could on their own.

“I know from almost two years of private discussions with Alcan that they also see the strategic logic behind this combination,” said Alain Belda, Alcoa’s chairman and chief executive.

“I’m disappointed that we were not able to come to a negotiated transaction, and while I’m taking this offer to shareholders, I hope that this combination can move forward with the support of Alcan management and board.”

The combined company, with 188,000 employees in 67 countries, would have had revenue last year of $54 billion.

The company’s alumina capacity would be about 21.5 million metric tons, and its aluminum capacity would be about 7.8 million metric tons. Alumina is used to make aluminum.

Until recently both companies were the world’s top two producers of aluminum, but they now lag behind Rusal of Moscow. Rusal, its rival Sual and Switzerland-based commodities trader Glencore International completed the combination of their assets at the end of March, creating United Company Rusal and surpassing Alcoa as the world’s largest aluminum producer.

Alcoa is offering a combination of cash and stock that it said was worth $73.25 for each Alcan share, a 20% premium to Alcan’s closing price Friday of $61.03.

Alcan’s U.S. shares rose $21.08 to $82.11. Alcoa shares gained $2.97 to $38.63.