Last night we ran a piece on Alcoa as potentially being acquired, although the speculation has been out there and we have covered this several times. BHP Billiton(BHP-NYSE/ADR) and Rio Tinto (RTP-NYSE/ADR) are each preparing theirown $40 Billion bids according to the Tuesday edition of the Timesnewspaper (link here).Be aware that the article says that the two are independent and neitherhas approached the board of directors yet. The stock is still up 8% around $35.60 in early trading, even though Reuters said that at least BHP Billiton is not currently eyeing the company.
This is one that we have listed as one of the "10 Most Undervalued"stocks back in mid-December when shares were closer to $30.00 and wealso noted that things were improving and the company was takingefforts to leverage up its balance sheet on January 19 in what seemedlike classic anti-takeover leveraging.If a buyer wants in they better strike before the company initiates theplan fully, otherwise they will be buying a more leveraged asset.Shares were $31.25 at the time.
Lastly, we ran a break-up value on it just last Thursday showing how its peers could signal up to $46.00 as a break-up value to the stock. It is hard to know with debt structures and other termsexactly what this would mean for common holders, so keep your eyes andears open on this one.
Jon C. Ogg
February 12, 2007
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