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Aluminum deal collapses
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April 13, 2000: 4:20 a.m. ET
Péchiney pulls out of $10.5B three-way merger; Alcan, Algroup to proceed
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LONDON (CNNfn) - France's Péchiney pulled out of a $10.5 billion three-way aluminum merger with Canadian producer Alcan and Switzerland's Algroup Thursday, blaming conditions imposed on the deal by European Union regulators. Alcan and Algroup said they planned to continue with their merger.
The three firms agreed last August to merge in a three-way stock swap to form the world's second-largest aluminum company. However regulatory objections that the partners were unable to resolve have sidetracked the deal.
Péchiney (PPEC) shares slumped 6 percent in early Paris trading Thursday to  48, a low for the year, after losing 7 percent the previous day. Algroup shares opened 1 percent higher in Zurich at 1,048 Swiss francs.
 The European Commission, the executive arm of the European Union, had sought a series of asset sales to dilute the combined company's 45 percent share of the European aluminum market.
Objections centered on their combined strength in the market for aluminum used to make autos and packaging, such as beverage cans.
However, the companies said in a statement Thursday that such asset sales would "seriously undermine the strategic viability" of the deal.
Péchiney and Alcan last month withdrew the merger proposal they had submitted to the Commission and said they would go back to the drawing board to craft a more palatable deal.
Alcan and Algroup will pursue their own two-way merger, which has already been cleared by European antitrust authorities, though it still requires the green light from U.S. officials. The merged firm will be known as APA.
Alcan (AL: Research, Estimates) shares closed unchanged at 34-1/4 Wednesday.
Regulators on both sides of the Atlantic have taken a tough line on consolidation in the industry. They are currently examining a bid by global market leader Alcoa (AA) to buy fellow U.S.-based aluminum maker Reynolds Metals (RLM: Research, Estimates) for about $5.6 billion. That deal was struck just hours after the APA merger was announced. 
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Péchiney
Alcan
Algroup
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