Alcoa to make hostile bid for Alcan

NEW YORK (Reuters) - Alcoa (AA.N) on Monday unveiled plans to make a hostile bid of $73.25 per share for Canadian rival Alcan Inc. AL.TO, after talks between the two companies over the last two years broke down.

The cash and stock offer would represent a 32 percent premium to Alcan's average closing price on the New York Stock Exchange over the last 30 trading days.

Alcan's shares surged 21.25 percent in U.S. trading before the opening bell on Monday on the news. Alcoa shares slipped 1.85 percent before the bell.

In consolidated electronic trading before the bell, Alcan's U.S.-listed shares jumped $12.97 to $74 after finishing Friday at $61.03. Alcan shares on the Toronto Stock Exchange were not yet active after closing Friday at C$67.55.

Alcoa closed Friday at $35.66 on the New York Stock Exchange. They were trading at $35 following the announcement of its offer.

Following the news, S&P 500 futures rose 0.5 point, well above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

(US$1 =C$1.105)

The following are comments from analysts and investors:

DAVID WHETHAM, RESOURCE FUND MANAGER AT SCOTIA CASSELS:

"It seems like a lot of people were talking about Alcan as a potential takeover. I don't think Alcoa was ever viewed as a likely purchaser just because of the antitrust reasons.

"They must think they can solve it.

"BHP Billiton was one that was talked about as an obvious suitor. Maybe there will be other bidders."

JOHN REDSTONE, ANALYST AT DESJARDINS SECURITIES:

"I just think that Alcan was perennially undervalued and it was inevitable something like this would happen."

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK & CO., NEW

YORK:

"This is not much of a move (for S&P 500 futures) off of this news. This Alcoa news is more of the same. M&A activity has been going on for a while. This is more of a strategic situation rather than an LBO. It's the world we live in now... Deals left and right."