I find the combination of geography and political science fascinating. I'm especially interested in the effects of these two disciplines on our planet's ability -- or lack thereof -- to keep up with mankind's growing commodities needs. It's both amusing and sometimes frustrating that many of the nations with the biggest reserve positions in a lot of these commodities are all too often characterized by politics that are a combination of shaky, flaky, and downright scary.
So I think it's interesting that the likelihood of the success of Alcoa's
But mid-article, the Journal seemed to shrug off that idea, noting that, while "Canada has a relatively open market for corporate control," and that "many companies have already slipped south of the border without political interference ... Pennsylvania [where Alcoa hangs its hat] is a remarkably unfriendly jurisdiction of unwanted acquirers." So much for the wisdom behind a possible Alcan run at Alcoa.
In the meantime, Alcoa appears to be jumping through hoops to placate Canadian politicos, especially those in Quebec. Last week, the company released a statement citing a letter to Alcan directors noting that "Alcoa [in the letter] outlined the many ways in which its offer to acquire Alcan not only meets, but exceeds [Alcan's] continuity agreements [with the Government of Quebec]."
It's becoming increasingly clear that an ultimate combination of the two North American aluminum giants must clear a number of hurdles. Nevertheless, I'm intrigued by both companies, and particularly by the potential marriage of the two. For instance, both trade at a forward multiple in the vicinity of 12 to 14 times, and each has an attractive PEG ratio of 1.2 to 1.4. Both have solid balance sheets and generate mid-teens returns on equity.
I'd suggest that Fools -- especially those who haven't looked closely at these two aluminum companies in the past -- familiarize themselves with both, and watch their figurative progress toward the altar very, very carefully.
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