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Threat to aluminum deal?
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March 2, 2000: 8:14 a.m. ET
Reports: European Union may harpoon Alcan-Péchiney-Algroup merger
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LONDON (CNNfn) - The European Union may block a three-way aluminum merger between Canada's Alcan, France's Péchiney and Switzerland's Alusuisse unless the companies make enough concessions to allay regulators' concerns that a combined entity would inhibit fair competition, according to published reports Thursday.
Alcan and Péchiney are the world's second- and fourth-largest producers, respectively. The deal is being billed as a merger of equals in which Alcan would remain the listed firm.
If completed, it would also be the first three-way cross-border merger among firms on either side of the Atlantic.
The European Commission, the EU's executive arm has until March 22 to reach a decision, though it may do so sooner, perhaps as early as March 14, the reports said.
The companies announced their $9.5 billion merger last Aug. 11 in a bid to unseat U.S. producer Alcoa as the world's top aluminum company. The latter riposted less than 24 hours later by unleashing its own unsolicited offer to purchase rival Reynolds Metals Co. for $5.6 billion in cash and stock. European regulators are also scrutinizing that deal on antitrust grounds.
An official at Quebec-based Alcan, which is leading the buyout, told Reuters Thursday that it was still holding talks with the Commission's antitrust officials with the aim of finding a solution that is acceptable to both sides.
"We are in ongoing discussions with the Commission's Merger Task Force and are still going on with the plan," Marcel Daniels, a spokesman for Alcan Europe was quoted as saying.
His comments followed a report in the Wall Street Journal in which people familiar with the matter were cited as saying Commission officials were likely to veto the three-way deal. The people told Dow Jones Newswires, which owns the Journal, that while the companies had tried hard to come up with concessions, any further concessions would be "deal breakers."
Separate Verdicts
That is precisely the Commission's aim, according to another source close to the talks, who told Reuters that the Commission is more worried about the regulatory problems inherent in Alcan's acquisition of Péchiney than with Alcan's separate purchase of Alusuisse, a unit of the Swiss Algroup.
"The Commission could reach a different verdict on the two agreements," the source was quoted as saying. "But this doesn't imply they don't have any problems with the Alusuisse acquisition."
The sources also said the Commission had proposed earlier this week to a committee of merger experts from the European Union's 15 member states to reject the deal under its current terms
Péchiney (PPEC) stock plummeted more than 15 percent in Paris Thursday as investors dumped shares on speculation the company could be squeezed out of the merger - a prospect Péchiney was keen to play down Thursday.
"No decision has been taken (by the European Commission)," a Péchiney spokeswoman told CNNfn.com. "The discussions are continuing, and at present we are on the path to merger."
The Journal said the European Commission was considering the deal as two separate mergers - one between Alcan and Péchiney and the other between Algroup and Alcan - rather than as a three-way amalgamation. "There are two deals," a person familiar with the matter told the newspaper. "There will be two commission decisions." 
--from staff and wire reports
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