Alcan (AL) - Get Report may not be welcoming rival Alcoa's (AA) - Get Report $27 billion merger bid with open arms, but the offer seems to be good news for mutual funds with big stakes in the two companies.
Alcoa made an unsolicited offer Monday in an effort to solidify its status as one of the world's top aluminum producers. The company says the cash and stock deal is worth $73.25 per Alcan share at Friday's prices.
Montreal-based Alcan said its board will consider the proposal.
Investors seem to think a better offer may be in the works. Alcan's stock closed the day at a higher level than Alcoa's offered price, surging 34.5% to $82.11 per share.
Among funds with the biggest allocations to Alcan is the
Global Natural Resources A, which had 2.94% of assets in the company's stock as of the end of 2006, according to fund tracker Morningstar. The
Manor fund also held 2.88% of its assets in Alcan at the end of February and
Canada Fund held 2.33% at the end of January.
All those funds performed well on the day the bid was announced. Shares of RS Global Natural Resources A were up 1.49%, closing Monday at $36.85. The Fidelity Canada Fund gained 1.39% and Manor rose 1.24%.
Shares of Alcoa, itself considered a possible takeover target in the merger-happy aluminum sector, jumped nearly 3% to finish Monday at $38.63.
According to Morningstar, several funds have big portions of their assets invested that stock, including the
Materials Index (with 5.03% at the end of 2006),
Opportunity C (4.46% at the end of March, its second largest holding) and
Select Materials Fund (4.23% at the end of February).
All these funds finished Monday in positive territory, but the gains weren't quite as significant as for funds with big Alcan stakes. The Fidelity Select Materials Fund picked up 60 cents, or 1.11%, to close at $54.44. The Vanguard Materials Index increased 1.06%, while the Snow Capital Opportunity C eked out a gain of just 0.4%.