Alcoa Bid Fires Up Alcan

By appealing directly to investors and going around management, Alcoa is making what is normally referred to as a hostile takeover bid. The company said its offer for shares of Alcan will begin Tuesday.

The move comes as something of a surprise, as few on Wall Street would have foreseen Alcan being bought out at these levels. Plus, some market observers had believed Alcoa itself might potentially be acquired at some point.

Both companies have a shared history and were once part of the same organization. The company that is now Alcoa chartered its Canadian unit as Northern Aluminum in 1902. The company became known as Aluminum Company of Canada in 1925.

Three years later, when Alcoa divested most of its non-U.S. assets, a business called Aluminium Ltd. was established to run the majority of the interests and became the parent of Aluminum Company of Canada. The Aluminum Company of Canada changed its name to Alcan Aluminum in 1987 after the acquisition of British Aluminium and various other assets.

Alcoa said the combined company would be "a stronger, more diverse global competitor with the scale and cost structure to be competitive over the long term within a rapidly changing industry landscape."

The new company would have dual head offices in Montreal and New York, with management functions located in each city. Montreal would be the headquarters for the global primary products business, which entails bauxite, energy, alumina and aluminum.