Aluminium Firms Line Up To Buy Alcan Stake
Sydney Morning Herald
Tuesday March 29, 1994
The world's major aluminium companies, along with institutional investors, are vying for control of Alcan Australia following the decision of its parent company, Alcan Aluminium of Canada, to sell off its $307 million controlling interest.
International majors such as US groups Aluminum Co of America and Reynolds Metals Company, Kaiser Aluminium and Chemical Corp and France's Pechiney are all believed to have expressed interest in buying the Alcan's stake.
The interest follows the Canadian company announcement at the beginning of this month that its 73.3 per cent stake was under review as part of a worldwide rationalisation program.
Although the big Alcan is yet to commit to a sale, it is expected that the stake in the Australian offshoot will be unloaded as part of its new strategy of concentrating on its upstream businesses in North America and Europe.
Since the Canadian parent unofficially placed Alcan Australia on the market, the local company's share price has risen to a peak of $2.50 last week before drifting back to a $2.35 close yesterday.
News of the possible sell-off by the parent saw the stock dip 30c to a low of $2. Institutionals then raced in after realising that there was a game still to be played out against a background of rising aluminium prices.
The parent company's decision to get rid of the downstream business comes at a time when Alcan Australia is entering a recovery mode, having trimmed costs and improved cash flow.
With the Australian market clearly on the rebound and 50 per cent of Alcan's finished products finding markets in Asia, Alcan Australia is being seen by the aluminium majors as a natural springboard for growth in this part of the world.
Alcan Australia's shareholders were only given sketchy details of their company's future at the annual general meeting held in Sydney yesterday.
The company's chairman, Professor Jeremy Davis, said the future depended on whether or not the Canadian company sold its stake, but a review of the core strategies of the company was being undertaken because of the possible sale.
"So long as Alcan Australia saw its future linked closely to that of Alcan Aluminium, the best interests of the company were met by those products and markets which were most consistent with the capabilities of the parent company," Professor Davis said.
"When the long-term strategic alignment is no longer taken for granted, we have to re-examine our assumptions about our market focus and the options which may arise."
But, he said Alcan would not change its strategic direction in any significant way in the next two years.
Meanwhile, the company said it had achieved a 10 per cent reduction in primary metal output from its Kurri Kurri smelter with only a minimal impact on employment.
© 1994 Sydney Morning Herald
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