Pechiney finally says yes to Alcan

The board of Paris-based aluminum maker Pechiney (NYSE: PY) decided Friday to recommend shareholders accept an offer from Canada's Alcan (NYSE: AL) to buy the company. The latest Alcan offer is worth 48.5 euros in cash and stock for every Pechiney share, or some US$4.5bn in total, up from the initial 41-euro hostile and rejected bid launched in July. Pechiney closed Friday in Paris at 46.65 euros, up 0.8% on the day. "Having carefully considered the terms of Alcan's new offer, and in light of the long-recognized industrial logic of a Pechiney-Alcan combination and the relative merits of this combination versus a viable stand-alone strategy, the board of directors of Pechiney has determined that such a new offer constitutes the best value alternative available to Pechiney shareholders," Pechiney said in a statement. The offer is subject to approval by competition authorities in the European Union and in the United States. If given the go-ahead, the deal would create the world's largest aluminum company in terms of revenues, ahead of current number one Pittsburgh-based Alcoa (NYSE: AA). Four years ago, Montreal-based Alcan and Pechiney attempted a three-way merger with Switzerland's Algroup, but that deal fell through after being snubbed by European antitrust authorities. In the event, Alcan, currently the world's second largest aluminum producer, acquired Zurich-based Algroup. Alcan, with revenues of US$12.5bn in 2002, has the Ouro Preto and Aratu smelters in Brazil as well as the Pindamonhangaba rolling plant and Santo Andre and Maua factories, among other Latin American interests. Pechiney, which had sales of 11.9bn euros last year, is involved in deals with Venezuelan state heavy industry holding company CVG to expand its aluminum and bauxite production.