Alcoa bids for Elkem (October 02, 2002)

U.S. aluminum giant Alcoa (AA-N) has initiated a cash tender offer for 3.5 million shares in Norway’s Elkem at 175 Norwegian kroner per share, or about US$26.31 apiece.

Alcoa, which currently owns 46.3% of Elkem’s outstanding shares, says it will will buy the shares on a “first come, first served” basis, including tenders from holders of 1000 shares or less.

The tender offer will formally close on Oct. 15, 2002, at 4:00 p.m. (Oslo time.)

Elkem, through its 50-50 partnership with Alcoa, is the second-largest aluminum producer in Norway. Elkem Aluminium has a primary production capacity of 200,000 tonnes per year.

Elkem is also the world’s largest supplier of silicon metal, important in aluminum castings for the automotive industry.

Alcoa has been operating for almost 40 years in Norway through joint ventures with Elkem. Together, Elkem and Alcoa own and operate aluminum plants in Lista and Mosjoen, and are committed to modifying both facilities.

Alcoa has held shares in Elkem since 1998, but under quirky Norwegian securities-trading law, any company with more than 40% ownership has to make an unconditional, cash offer for all the outstanding shares at a price equal to the highest price paid by the acquisitor during the last six months.

In January 2002, Alcoa surpassed that 40% barrier and launched a bid for Elkem shares at 155 crowns per share (or US$17.38, at the time).