Alcoa Bid Fires Up Alcan

Updated from 11:41 a.m. EDT

Alcan (AL Quote) soared 33% Monday after aluminum rival Alcoa (AA Quote) unveiled a $27 billion unsolicited merger proposal.

Alcoa's deal would give shareholders of Montreal-based Alcan $58.60 in cash and 0.4108 Alcoa shares for each Alcan share held. Alcoa said the deal is worth $73.25 a share at Friday's prices -- a 20% premium to Alcan's trading price.

Alcan said its board would look into the matter.

"Consistent with its obligations and focus on delivering value to shareholders, Alcan's Board of Directors will consider the proposal and how it could impact the interests of Alcan's shareholders and other stakeholders," it said in a midmorning announcement.

"Alcan's Board of Directors and management remain committed to building and delivering value for shareholders and other stakeholders, and believe that Alcan's strategy and recent performance and accomplishments clearly demonstrate this commitment."

With the end of trading near, Alcan was climbing $19.99 to $81.02, and Alcoa rose $2.91, or 8.2%, to $38.57.

Alcoa said it made the bid after "almost two years of discussions between our companies regarding a variety of potential business combination transactions, including unsuccessful board-level discussions of a merger transaction last fall."

Alcoa said it hopes to cut costs by $1 billion annually after closing the deal. It sees completing the transaction by the end of the year.