Alcan may be able to foil Alcoa bid

Alcan's Paris headquarters

TEXT OF INTERVIEW

Doug Krizner: Canadian aluminum maker Alcan's been fighting a hostile takeover from Alcoa. This morning, Alcan could be getting some help from the London-based mining company Rio Tinto. There are reports Rio's preparing a $34 billion bid for Alcan. Michael Hlinka is a business commentator on CBC Radio. Mike first get me the background on Alcoa's $28 billion offer.

Michael Hlinka: Alcoa and Alcan were in friendly talks for a couple of years that seemed to break down about two or three months ago. At that point Alcoa launched a hostile takeover bid, and as the name suggests, hostile means that we're not friends anymore, but we're really adversaries in this. Human nature being what it is, Alcan was looking for alternatives and Rio Tinto seems to be a pretty credible one.

Krizner: So Rio Tinto coming to light today, does it seem like Alcan would favor that type of marriage?

Hlinka: It seems to be. From what we know right now with the Alcan-Rio Tinto, this would be somewhat like a merger of equals. If Alcoa wins, Alcoa's taking them over and there's a kind of sense of, you know, being vanquished if that would actually occur.

Krizner: Michael what makes Alcan such an attractive target?

Hlinka: There's a couple of different reasons why Alcan's a particularly attractive company. One of it is that of course its operations are in Canada and this is a very, very stable place to do business. A lot of the mining that's going on right now is less, really frankly less stable parts of the world and that's obviously a concern. As well when you're talking about doing mining, you're talking about energy-intensive industries and we tend to have in Canada a somewhat subsidized grid. We're not and companies aren't really paying the full economic cost. So there's a competitive advantage for mining in Canada there might not be in other parts of the world.

Krizner: Michael Hlinka is business commentator for CBC Radio. Hey Mike, thanks very much for joining us.

Hlinka: My pleasure

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