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Last Updated: Friday, 12 September, 2003, 21:44 GMT 22:44 UK
Pechiney accepts Alcan bid
Pechiney worker
Pechiney workers are promised their jobs are safe
French aluminium and packaging group Pechiney has accepted a 4bn euro ($4.5bn; 2.8bn) takeover bid from Canada's Alcan.

The French company urged its shareholders to accept Alcan's improved cash-and-shares offer, as the "best alternative available to Pechiney shareholders".

The takeover, which will turn Alcan into the world's biggest aluminium producer ahead of US rival Alcoa, is still subject to approval by the European and US competition authorities.

But if it is allowed to go ahead it will be the biggest ever takeover in France by a foreign company.

Low offer?

It will also bring to an end a century of independence for Pechiney.

The deal, which is worth 48.5 euros a share, represents a 40% premium over Pechiney's value before the offer was launched two months ago.

Some analysts said Alcan has underpaid for its smaller French rival, as the offer was little more than an improved bid made just over a week ago, later retracted, of 47 to 48 euros per share.

"This seems pretty low," said one London-based analyst.

"Obviously no white knight showed up and Alcan had no reason to raise its offer much further."

More clout

Shares in Pechiney initially rallied by about 3% after the news but slipped back to close just 0.84% higher at 46.65 euros.

Analysts said the price reflected investor disappointment.

Alcan shares jumped 10% to a new year high of $38.50 in New York and C$52.94 in Toronto on Friday afternoon.

The tie-up will give Alcan more clout with customers and allowing it to cut costs against a backdrop of depressed aluminium prices and economic weakness.

No more job cuts

Alcan has also estimated the marriage will generate $250m in annual cost savings.

It will also create the world's biggest packaging firm and boost Alcan's presence in the aerospace and car markets.

Alcan has pledged not to axe any more of Pechiney's 34,000 staff, apart from the job cuts already announced by the French firm.

EC competition regulators, which in 1999 torpedoed a three-way link-up between Pechiney, Alcan and Algroup, will decide later this month if this latest deal can go ahead.


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