Will somebody bid for Alcoa?
By Tom Stundza -- Purchasing, 7/18/2007 12:50:00 PM
With consolidation running rampant in the world aluminum industry, “Alcoa certainly looks like the fish flopping on the beach right now," says analyst John Anton at research firm Global Insight, now that the Pittsburgh-based aluminum mega-company was trumped by Rio Tinto of London and rescinded its offer for rival producer Alcan of Montreal.
Alcoa’s chairman, Alain Belda, says the Pittsburgh-based company plans to stand alone, but observers questioned that strategy given the rapid consolidation in the metals and mining industry. "They are stuck out [there] on their own," says John Mothersole, another Global Insight analyst. "As an organization and as a company, they do not fit into this big, diversified model among the global players. You wonder what is next for them."
So, it’s no surprise that some publications--The Australian newspaper in Melbourne and The Observer newspaper in London--are touting the possibility of Anglo-Australian mining giant BHP Billiton offering a £20 billion takeover bid for Alcoa.
“The British press is at it again, but $40 billion, or $43 a share, won't do it,” says an e-mail to Purchasing.com from analyst Chuck Bradford of Bradford Research/Soleil Securities in New York. He points out that Alcoa is registered in Pennsylvania, a state that has protective legislation to keep its companies from hostile takeovers, “so a bid for Alcoa may need to be high enough to be friendly, possibly $60/share, in our opinion.”
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