There was a brief moment Thursday, about halfway through a press conference to announce Rio Tinto PLC's record $38.1-billion (U.S.) takeover of Alcan Inc. , where Dick Evans looked as though he might blush. And why not? The chief executive of Alcan was being publicly singled out by his new bosses for running an air-tight auction, for acting like a pro, and, not insignificantly, for being "the best leader in the aluminum world."
The praise, which elicited smiles and handshakes around the dais, belied one small fact: Mr. Evans never wanted things to turn out this way.
Only months ago, Rio Tinto chairman Paul Skinner approached Alcan chairman Yves Fortier about the possibility of undertaking a merger. It was merely the latest quiet advance in an intermittent courtship that spanned more than a decade, and followed on earlier discussions between Mr. Evans and former Rio Tinto management.
Relations between the two companies have always been cordial, and when Mr. Skinner inquired about a possible deal, he received the same answer he always did: "Thanks," Mr. Fortier said. "But no thanks."
All of that changed on May 7, the day that Alcan's U.S. rival, Alcoa Inc. , tabled a $28-billion hostile offer for the company, setting in motion a process that would almost inevitably result in Alcan losing its cherished independence.
"It's difficult with such a tremendous legacy, and [with]things going very well, to be limited on your options," Mr. Evans said in an interview. "In effect, Alcoa's move created certain limitations on our options."
Mr. Evans conceded that he had mixed feelings about the sale, but took some comfort in spinning a virtue out of necessity. Alcan extracted an offer of $101 a share from Rio Tinto, a 66-per-cent premium to where its stock was trading in early May, and about 35 per cent more than Alcoa's offer - a price runup driven by a bidding war this week with Brazil's CVRD.
"We all thrive on crisis and what doesn't kill us makes us better. We were able to take a very difficult situation and do what I would say was a very methodical, rigorous and confidential process," he said.
In comparison, he took a veiled swipe at the $35-billion (Canadian) takeover battle for BCE, which has drawn stinging criticism from many of the participants. "Had we not been able to control and manage that situation, as you have seen very well in other circumstances, it can get quite messy."
The Alcan auction was remarkably quiet by comparison, given that the eventual deal turned out to be the largest in Canadian history, and involved bidders from several continents. But for Alcan, these secretive talks are not unusual.
For the past two years, in fact, it had been privately discussing a deal with Alcoa, but those talks always ran aground over concerns about regulatory hurdles, cultural issues and confidentiality agreements.
When they last foundered in December, Alcoa decided to pursue a different tack and make a hostile attempt, essentially sealing Alcan's fate.
Mr. Evans and his board opened a data room in late May, offering up confidential information to a handful of deep-pocketed global suitors, with the exception of Alcoa, which wasn't allowed to take part.
While Alcoa canvassed regulators to ease their competition concerns, Alcan was meeting with representatives from Rio Tinto, Brazil's Companhia Vale do Rio Doce (CVRD) and Australia's BHP Billiton Ltd. , the world's largest miner, according to people familiar with the matter.
These people said the discussions accelerated in recent weeks, by which point BHP had begun to contemplate a bid for Alcoa and was no longer really in the running. Instead, it was a two-horse race between Rio Tinto and CVRD, a deep-pocketed mining conglomerate that became a household name in Canada last year when it purchased Toronto nickel miner Inco Ltd.
Senior executives from both Rio Tinto and CVRD have been huddling in Montreal for the past few weeks, holding discussions with senior management of Alcan, and also talking to members of the Quebec government to assuage concerns about a foreign takeover.
Last weekend, as the bidding was coming down to the wire, Rio Tinto enlisted CIBC World Markets Inc. as a Canadian adviser to help it shape its offer.
By Wednesday, sources said CVRD had tabled an offer of more than $90 a share - far more than Alcoa's cash-and-stock offer and what most analysts had expected. Rio Tinto, led by Tom Albanese, who only took the CEO's role a week before Alcoa put Alcan in play, decided to deliver what it hoped would be a knockout blow - a staggering offer of $101 a share.
Sources said Alcan's advisers spent several hours in a meeting with the company's board Wednesday to explain the Rio Tinto offer, and stressed the size of the premium they could receive with this bid.
Alcan clearly believed it could find a higher offer than the one from Alcoa, but it wasn't counting on a triple-digit bid, people close to the company said. "It was inconceivable that it would go this high," one source said.
Mr. Albanese, meanwhile, wasn't sure that this would prove to be the coup de grâce, but he did have a hunch. He boarded a flight to Montreal before Alcan's board had made up its mind ("Let's just say I fly on spec," he explained in an interview) and was rewarded with a phone call around midnight from the board informing him he had won, and paving the way for him to create what would be the world's largest aluminum producer.
Rather than celebrate, he immediately asked his hotel for a wakeup call at 2 a.m. so he could prepare for a conference call with Australian media at 4 a.m., shortly after the deal was publicly announced.
It's widely expected that Rio will complete the deal, without facing a higher competing bid. CVRD issued a statement saying it was not in discussions with Alcan, although it insisted it would not rule out a bid in the future. However, sources say the Brazilian miner has all but given up and thinks the price is too high.
Alcoa has also retreated, and now might find itself in the crosshairs of a suitor like BHP. Sources said Alcoa management and advisers recommended to the board of directors Thursday in a 3 p.m. conference call that they should walk away from a process in which they could clearly no longer afford to participate.
"It's one thing for Rio at this point in the cycle to take on this kind of leverage," explained a source close to Alcoa. "For [Alcoa]it would be like betting the whole company."
Mr. Evans and Mr. Fortier went out of their way Thursday to single out Alcoa's hostile tactics as the trigger that forced Alcan's auction. Mr. Fortier insisted that Alcoa's commitment to Quebec and Canada "pales in comparison" to what Rio Tinto has offered and, adding insult, suggested it's "not even a close second."
Mr. Evans, who will remain in Montreal as head of the combined aluminum operations, which will be called Rio Tinto Alcan, insisted Thursday he had no regrets that he wasn't the ultimate consolidator in this last cycle of feverish merger activity. More surprisingly, perhaps, he said he bears no enmity toward his counterparts at Alcoa, even though he blames them for pushing the company into a sale.
"Personally, no, I do not have bitter feelings," he said. "I think they made a bad decision, and that had consequences for us. That's life and that's business. And life goes on and we're looking forward now, not backwards.