Alcan (AL) has become a hot property. First Alcoa (AA) tried to buy the company and was rejected.
Over the last day, media reports indicated that Australia metals giant Rio Tinto (RTP) might enter the bidding.
Late media reports now say that Norsk Hydro (NHY), the Oslo-based energy and power firm, may make an offer of $30 billion, much higher that the $27 billion that Alcoa bid.
The potential offer is puzzling. While Alcoa and Rio Tinto have metals as their core businesses and would have some real economies of scale in taking over Alcan, the potential saving for Norsk Hydro are much less evident.
An additional problem is that takeover rumors have sent Alcan’s market cap above $31 billion, and shareholder may expect a premium to that, whether that expectation is reasonable or not.
Alcan may just get too expensive to buy.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.