ALEXANDER CAMPBELL / LONDON
Canadian aluminium producer Alcan has upped its bid for French rival Pechiney to c4 billion ($4.5 billion), winning over the French board, which rejected its previous c3.4 billion offer. The merger would bring Alcan into the European aerospace market as the largest supplier, ahead of USproducer Alcoa and UK-Netherlands group Corus, and would also create a new world leader in the aluminium business. Together Alcan and Pechiney posted $25.9 billion in sales last year, ahead of Alcoa at $20.3 billion.
Alcan's chief executive Travis Engen said last week he was "confident" the European Commission's competition regulators would clear the deal, which would lead to Alcan's domination of the European market. The merged company would have European sales of $12.7 billion, ahead of Alcoa, which has only $5 billion. However, Alcoa is well represented in the European aerospace market. French stock exchange regulator COB is to make a decision soon. The final decision, due on 29 September, will rest with the European Commission.
Although demand for aluminium in Europe is recovering from the slowdown last year, the European Aluminium Association says European producers face growing competition from China where refinery capacity and production are growing "exponentially". Engen says the merger would allow Alcan to make savings of around $250 million by 2005.
Source: Flight International
