Canadian group Alcan yesterday propelled itself into front position in the global aluminium business by securing the backing of France's Pechiney for a €4bn takeover after two months of talks.
The French group succumbed to a third offer from its bigger Canadian rival after Alcan gave undertakings that it would seek no further redundancies among Pechiney's 34,000-strong workforce than planned under the current restructuring.
Foreign takeovers in France are highly contentious and, in addition to government approval, require the backing of unions and a workforce worried by the threat of large-scale job-losses.
Alcan agreed at renewed talks with the Pechiney board to set up a global headquarters for aerospace and engineering products - the fastest-growing segment of the aluminium industry - in France. It had already offered to set up three other global centres in France, including one for packaging.
Yesterday's deal falls far short of the €55 a share mooted when the French group's board turned down a €47-48 offer at the start of this month.
Alcan, which made an initial €41 bid in early July, said it would pay up to €48.50 in cash and shares, including a €1 per share supplement if 95% of shareholders vote for the deal. They get €24.60 in cash and the rest in shares.
Industry sources said the offer, now worth €4bn, was a 42.6% premium on Pechiney's price of €34 on July 7 - the day the first offer came in - and almost 64% on its price before market rumours of an approach circulated.
Pechiney's board, which met yesterday, said it had long recognised the industrial logic of a combination with Alcan despite the relative merits of a viable stand-alone strategy.
With other would-be partners such as NorskHydro still digesting the takeover of a German rival, "it had nowhere else to go", sources said.
Alcan, which employs 54,000, was blocked from acquiring Pechiney in a three-way merger with Swiss group Alusuisse in 2000 by the European commission. The Swiss leg of the deal went ahead.
Yesterday's agreed deal depends on EU approval before the end of this month - without Brussels ordering a full-scale inquiry.
The combined group would have greater sales than the current global leader, Alcoa of the US.