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Alcan raises Algroup offer
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June 1, 2000: 11:02 a.m. ET
Canadian aluminum firm bids $4.7B, adds cash to lock in Swiss partner
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LONDON (CNNfn) - Canada's Alcan Aluminium sweetened its proposed buyout of Switzerland's Alusuisse Lonza to $4.73 billion on Thursday, throwing in a cash element and raising the value of its previous all-stock offer by nearly 5 percent.
Alcan offered 17.1 of its shares for every share in Alusuisse (also known as Algroup), in addition to a total of 225 Swiss francs ($133) in cash, including a one-time dividend for Algroup shareholders. Alcan first offered to acquire the Swiss company in exchange for shares worth about $4.5 billion (at current prices) as part of a failed plan for a three-way deal also including France's Péchiney. 
"The key thing now is whether Péchiney will counter-bid for Algroup," said analyst Christian Georges of Credit Lyonnais Securities. That decision would be "a very tough call" for the French firm, Georges said, with the industrial logic of combining the firms balanced by the high price Algroup now commands.
Georges warned that Péchiney shareholders might not stomach a deal if they judged the price was too high, saying that Algroup stock's market valuation is already at a significant premium to Péchiney's shares.
Algroup executives were bullish about the Alcan deal.
"This combination represents exceptional value to our shareholders," said Sergio Marchionne, chief executive officer of Algroup. "The new company will be in an improved position to serve its customers' needs on a global basis."
The companies said BZ Group Holding, operated by Swiss financier Martin Ebner, and its affiliates have committed to tender 34 percent of Algroup's shares to Alcan.
The new deal requires the approval of Algroup shareholders, who are set to vote in July. The companies said they expect the combination to generate savings of roughly $150 million. They could not immediately say how much Algroup debt Alcan would assume. The enlarged firm would generate annual revenue of $12.4 billion and employ around 30,000.
Three-way deal shot down
In April, Péchiney pulled out of the three-way deal, first valued at about $10.5 billion, after European Union antitrust regulators demanded more changes to the resulting company's structure than Péchiney would bear.
The EU officials did, however, approve the merger of Alcan with Algroup. When that deal was first announced the companies said they had agreed on an all-stock transaction offering 20.1745 Alcan shares for every share of Algroup, for a total of $4.5 billion at Wednesday's prices.
Based Alcan Aluminium's (AL: Research, Estimates) closing price of 32-15/16 Wednesday on the New York Stock Exchange, the new deal values Algroup at about $4.7 billion, with cash representing about one-fifth of the total value.
Algroup shares have risen this week amid speculation Alcan might raise its offer, and closed Wednesday at 1,068 francs. The Zurich exchange was closed Thursday for a public holiday.
A Péchiney spokeswoman could not be immediately reached for comment.
Péchiney (PPEC) rose 1.8 percent to  44.88 in Paris on Thursday.
Less than a day after the three companies announced their merger agreement last August, leading U.S. rival Alcoa (AA: Research, Estimates) unveiled the $5.8 billion purchase of Reynolds Metals, allowing the American giant to remain the world's largest aluminum company. 
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Alcan
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Péchiney
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