Topic: Growth Stocks

The Wall Street Stock Forecaster Hotline – Friday, May 11, 2007

Article Excerpt

ALCOA INC. $38.03, New York symbol AA, has offered to buy smaller Canadian rival Alcan Inc. (New York symbol AL) for roughly $27 billion in cash and stock. The combined company would be the world’s largest aluminum producer, accounting for 20% of global output and annual revenue of $54 billion. This is a huge commitment for Alcoa, which earned $2.5 billion or $2.90 a share in 2006, on revenue of $30.4 billion. Alcoa feels it can cut the merged company’s annual expenses by $1 billion after three years. However, the deal faces several hurdles. A takeover could threaten Alcan’s low-cost electrical power deals with some Canadian provinces, which would drive up production costs. Anti-trust regulators will probably force Alcoa to sell some of its aluminum auto parts and aerospace equipment operations. Alcan’s stock is trading about 8% above the value of Alcoa’s offer. That’s because investors feel larger foreign mining companies such as BHP Billiton Ltd. of Australia, Swiss-based Xstrata plc or…