Alcoa in hostile $4.2bn bid for rival Reynolds

ALCOA, THE world's largest aluminium producer, yesterday said it would launch a hostile $4.2bn cash offer to acquire Reynolds, after Reynolds, which ranks third, voted to reject its friendly overtures.

Alcoa said it would seek the support of Reynolds shareholders to replace the directors, redeem the company's "poison pill" anti-takeover defence, remove other impediments to a takeover and begin a $65-a-share cash tender offer this week for all outstanding Reynolds shares.

Pittsburgh-based Alcoa said it plans to file for US regulatory approval this week. Alcoa has said it believes an acquisition of Reynolds would not be anti-competitive due to the "global nature of the metals marketplace" and the current consolidation in the industry.

Alcoa made public its offer last week hoping Reynolds would negotiate a friendly deal, shortly after Canada's Alcan, the second-largest aluminium company, unveiled plans to merge with France's Pechiney and Alusuisse- Lonza Holding of Switzerland to create a company that would eclipse Alcoa's revenue. A successful purchase of Reynolds would allow Alcoa to retain its top spot.

Reynolds said yesterday it would explore all alternatives to increase shareholder value, including a sale of the company. Reynolds has reportedly received an offer at an unspecified price from Michigan Avenue Partners, a Chicago-based buyout firm that purchased a manufacturing facility from Reynolds last year.