 Shared
History, Shared Values, One Future Alcoa’s Offer for Alcan 7 May 2007 Filed by Alcoa Inc. Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Alcan Inc. Commission File No: 001-03677 |
 2 Forward-Looking Statements Certain statements and assumptions in this communication contain or are based on "forward-looking“ information and involve risks and uncertainties. Forward-looking statements may be identified by their use
of words like "anticipates," "believes," "estimates," "expects," "hopes," "targets,"
"should," "will," "will likely result," "forecast," "outlook," "projects" or other words of similar meaning. Such forward-looking information includes, without limitation, the statements as to the impact of the proposed acquisition on revenues, costs and earnings. Such forward looking
statements are subject to numerous assumptions, uncertainties and risks,
many of which are outside of Alcoa's control. Accordingly, actual results and developments are likely to differ, and may differ materially, from those expressed or
implied by the forward-looking statements contained in this
communication. These risks and uncertainties include Alcoa's ability to successfully integrate the operations of Alcan; the outcome of contingencies including litigation, environmental
remediation, divestitures of businesses, and anticipated costs of capital
investments; general business and economic conditions; interest rates; the supply and demand for, deliveries of, and the prices and price volatility of primary aluminum,
fabricated aluminum, and alumina produced by Alcoa and Alcan; the timing of
the receipt of regulatory and governmental approvals necessary to complete the acquisition of Alcan and any undertakings agreed to in connection with the receipt of such
regulatory and governmental approvals; the timing of receipt of regulatory and governmental approvals for Alcoa's and Alcan's development projects and other operations; the availability of financing to refinance indebtedness incurred in connection with the acquisition of Alcan on reasonable terms; the availability of financing for Alcoa's and Alcan's development projects on reasonable terms; Alcoa's and Alcan's respective costs of production and their respective production and productivity
levels, as well as those of their competitors; energy costs; Alcoa's and Alcan's ability to secure adequate transportation for their respective products, to procure mining equipment and operating supplies in sufficient quantities and on a timely
basis, and to attract and retain skilled staff; the impact of changes in foreign currency exchange rates on Alcoa's and Alcan's costs and results, particularly the Canadian dollar, Euro, and Australian dollar, may affect profitability as some
important raw materials are purchased in other currencies, while products
generally are sold in U.S. dollars; engineering and construction timetables and capital costs for Alcoa‘s and Alcan's development and expansion projects; market competition; tax benefits and tax rates; the outcome of negotiations with key customers; the resolution of environmental and other proceedings or disputes; and Alcoa's and Alcan's ongoing relations with their respective employees and with their respective business partners and joint venturers. |
 3 Forward-Looking Statements Additional risks, uncertainties and other factors affecting forward looking statements
include, but are not limited to, the following: •Alcoa is, and the
combined company will be, subject to cyclical fluctuations in London Metal Exchange primary aluminum prices, economic and business conditions generally, and aluminum end-use markets; •Alcoa's operations consume, and the combined company's operations will consume,
substantial amounts of energy, and profitability may decline if energy costs
rise or if energy supplies are interrupted; •The profitability of Alcoa
and/or the combined company could be adversely affected by increases in the cost of raw materials; •Union disputes and other employee relations issues could adversely affect Alcoa's
and/or the combined company's financial results; •Alcoa and/or the
combined company may not be able to successfully implement its growth strategy; •Alcoa's operations are, and the combined company's operations will be, exposed to
business and operational risks, changes in conditions and events beyond its
control in the countries in which it operates; •Alcoa is, and the
combined company will be, exposed to fluctuations in foreign currency exchange rates and interest rates, as well as inflation and other economic factors in the countries in which it operates; •Alcoa faces, and the combined company will face, significant price competition
from other aluminum producers and end-use markets for Alcoa products
that are highly competitive; •Alcoa and/or the combined company could be adversely affected by changes in the business or financial condition of a significant customer or customers; •Alcoa and/or the combined company may not be able to successfully implement its
productivity and cost-reduction initiatives; •Alcoa and/or the
combined company may not be able to successfully develop and implement new technology initiatives; •Alcoa is, and the combined company will be, subject to a broad range of
environmental laws and regulations in the jurisdictions in which it operates
and may be exposed to substantial costs and liabilities associated with such laws; •Alcoa’s smelting operations are expected to be affected by various
regulations concerning greenhouse gas emissions; •Alcoa and the combined
company may be exposed to significant legal proceedings, investigations or changes in law; and •Unexpected events may increase Alcoa's and/or the combined company's cost of doing
business or disrupt Alcoa's and/or the combined company's operations.
See also the risk factors disclosed in Alcoa's Annual Report on Form 10-K for
the fiscal year ended December 31, 2006. Readers are cautioned not to put
undue reliance on forward-looking statements. Alcoa disclaims any intent or obligation to update these forward- looking statements, whether as a result of new information, future events or otherwise,
except as may be required by applicable law. |
 4 Presenters Alain J. P. Belda Chairman and Chief Executive Officer Charles D. McLane Vice President and Chief Financial Officer |
 Alain J.
P. Belda Chairman and Chief Executive Officer |
 6 A Winning Strategic Combination Creates the premier fully integrated aluminum company Enhanced cash flow and $1 billion in annual synergies Significant scale to compete in a changing environment Optimized portfolio of upstream assets Enhanced capacity for growth Strong technology, operations and talent Shared values and commitment to sustainability |
 7 188,000 $9.5 billion $54.0 billion 7.8 million tonnes #1 21.5 million tonnes #1 Combined $23.6 billion $30.4 billion Revenue $3.9 billion $5.6 billion EBITDA 65,000 123,000 Employees 4.4 million tonnes #1 15.6 million tonnes #1 3.4 million tonnes #3 Aluminum Capacity (Global Ranking) Alumina Capacity (Global Ranking) 5.9 million tonnes #4 Creating an Industry Leader Source: Company 2006 annual reports and 10-Ks Note: Alumina includes specialty alumina |
 8 Bauxite & Refining Access to World-Class Reserves 2 nd Quartile on Cost Curve Capacity: 21.5 MMT Energy Self Generation: 34% Long Term Contracts: 54% Smelting Global Rank: #1 2 nd Quartile on Cost Curve Capacity: 7.8 MMT End Markets Creating an Industry Leader Renewable Hydro: 54% Building & Construction Packaging Commercial Transportation Automotive Aerospace Global Rank: #1 |
 9 Access to quality bauxite and alumina Evolving Competitive Landscape Aluminum consumption projected to double over 15 years Emerging global competitors in Russia, China, India and the Middle East Scale required to maintain competitiveness Evolving end markets demanding product innovation Industry Fundamentals Access to long-term, low cost energy Innovation through world-class technology and R&D Proven commitment to sustainability Keys to Success Alcoa / Alcan well positioned to compete with large global peers and deliver profitable growth |
 10 World Aluminum Consumption (MT) Outlook for Aluminum is Strong 2005: 32M 2020E: 60.6M +0.4 +1.1 +0.9 +0.5 +7.1 +0.5 Latin America +4.1 Western Europe +2.4 E. Europe, CIS & Other +4.4 North America +17.2 Asia Source: CRU; McKinsey & Co 1998: 22M 7.2 6.7 1.7 5.6 0.8 14.3 7.2 2.6 6.7 1.2 31.5 11.6 5.0 10.8 1.7 |
 11 $155 $121 $93 $91 $66 $55 $41 $41 $41 $38 $30 $29 $28 $27 $25 $74 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 Industry Landscape Demands Large Scale Top 15 Metals & Mining Companies Source: Factset and public filings. Market data as of May 4, 2007. Note: Alcoa / Alcan represents the combined enterprise value pro forma for shares and new debt issued for transaction. (1) United Company Rusal. Enterprise value estimate per Wall Street research. Combination creates the 5 th largest metals & mining company in the world |
 12 South America 6.5% CIS/E. Europe 5.1% BHP Billiton 5.6% India 3.2% Alcan 8.3% Alcoa 19.8% Alcoa 23.2% Reynolds 5.7% Pechiney 3.5% India 2.8% E. Europe 3.9% South America 5.8% Alcan 9.8% Alusuisse 2.3% Billiton 3.4% Inespal 2.1% 1998 2006 Transforming Alumina Landscape Total Market: 53 MMT Total Market: 79 MMT Source: CRU Note: Percentages may not add to 100% Significant Growth in the East Alumina Capacity Rusal 13.2% Chalco 12.1% Other China 9.8% Hydro 2% RTZ Comalco 4% Other W. World 10% China 6.8% CIS 10.8% Hydro 1% VAW 1% Comalco 3% Other W. World 15% |
 13 Rusal 10.3% Chalco 9.2% Other China 21.0% Alcan 9.4% Alcoa 10.9% Middle East 4.2% BHP Billito 3.5% India 2.1% CIS/E. Europe 2.8% South America 3.9% Alcoa 8.9% Pechiney 3.3% Reynolds 4.5% E. Europe 1.9% Middle East 3.6% Alcan 6.7% Alusuisse 1.1% Billiton 4.2% Inespal 1.4% Alumax 2.8% 1998 2006 Significant Growth in the East Aluminum Capacity Transforming Aluminum Landscape Total Market: 25 MMT Total Market: 39 MMT Source: CRU Note: Percentages may not add to 100% Hydro 3% VAW 2% Comalco 3% Other W. World 29% Hydro 4% RTZ Comalco 2% Other W. World 16% China 10.4% CIS 14.9% |
 14 Alcoa Alcan Shared Access to Quality Bauxite & Alumina Alcoa Alcan Shared Total Potential Bauxite Alumina 12 mines and 13 refineries on 6 continents Note: Includes ownership in JVs |
 15 9,564 2,269 2,930 4,448 5,907 10,443 15,617 21,524 6,926 16,490 0 5,000 10,000 15,000 20,000 25,000 Alumina Refinery Cash Costs ($/MT) 0 50 100 150 200 250 300 350 400 450 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Worldwide-Production---000-MT 2006 Cost Curve Alcan Average Alcoa Average 66 th Percentile 38 th Percentile World-Class Bauxite & Alumina Franchise Bauxite & Alumina 2006 ($Millions) 2006 Refining Capacity (kMT) Chalco Other China Source: CRU full operating cost, Alcoa analysis; Company filings Global supplier with premier facilities Low cost production base - majority of production in bottom half of cost curve Best in class operational expertise and technology Investing in high return growth projects Combined Total Revenue 4,929 3,845 8,774 EBITDA 1,670 609 2,279 |
 16 Alcoa Alcan Shared Attractive Smelter Portfolio 46 smelters on 6 continents Note: Includes ownership in JVs |
 17 7,788 855 1,364 1,683 3,418 3,985 4,370 3,534 853 771 8,096 11,630 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Primary Metals Aluminum Smelter Cash Costs ($/MT) 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000 0 5,000 10,000 15,000 20,000 25,000 30,000 Worldwide-Production---000-MT 2006 Cost Curve Alcan Average Alcoa Average 34 th Percentile 51 st Percentile 2006 Smelting Capacity (kMT) Attractive Smelter Portfolio Chalco Other China 2006 ($Millions) Global supplier with premier facilities Low cost production base Best in class operational expertise and technology 88% of power requirement self-generated or under long-term contracts Investing in high return growth projects Source: CRU full operating cost, Alcoa analysis; Company filings Combined Total Revenue 12,379 11,147 23,526 EBITDA 2,881 2,962 5,843 |
 18 5% 45% 50% 54% 12% 34% 21% 18% 61% Access to Long-Term, Low Cost Energy Alcoa – Type Alcan - Type Short-term Self-generation Long-term Short-term Self-generation Long-term Alcoa/Alcan - Type Short-term Self-generation Long-term Alcoa/Alcan - Source Hydro Other 46% 54% 34% power self-generated; 54% under long-term contract 54% of power from renewable hydro Source: Company filings and reports; CRU; Alcoa analysis
|
 19 Alcan: AP50 proprietary technology to be piloted at Complexe Jonquiere Alcoa: Post-Carbon Smelting through use of inert anode. Small-scale
deployment in U.S. smelter today – targeted pilot in Quebec smelter. Can reduce CO 2 emissions from smelting by nearly 80%. Alcoa: Proven Carbon Sequestration for bauxite residue. On-line in Western
Australia refinery. Eliminates 70,000 tons of CO 2 each year – equivalent to taking more than 17,500 cars off the road. Emerging, Breakthrough Technologies Source: IAI |
 20 Shared Commitment to Sustainability Winner – Alcoa 1996, Alcan 2007 Alcoa – Founding Member 2006 Alcan – Founding Canadian Member 2007 Alcoa – 5 Time Member Alcan – 4 Time Member Founded $1 million Prize for Sustainability Founded $9 million Conservation and Sustainability Program |
 21 Alcoa Alcan Shared Refinery Smelter Mine Juruti Suriname Brunei North Iceland Kitimat Coega Quebec Isal Ningxia Jamalco Sohar I Sohar II Sao Luis Wagerup Vietnam Ghana Gove Guinea Global Growth Opportunities Source: Company filings and press releases Victoria Ops Saudi Arabia Trinidad Madagascar |
 22 Deeply Committed to Canada Today 1,400 kMT 7% 1,400 kMT 24% - - Alumina Capacity Canada % of Total Company $769 19% $371 21% $398 18% Income from Continuing Ops Canada % of Total Company 2,773 kMT 35% 1,774 kMT 51% 999 kMT 23% Aluminum Capacity Canada % of Total Company 16,100 9% 11,000 17% 5,100 4% Employees Canada % of Total Company $8,555 12% $5,451 17% $3,104 10% Total Revenue Canada % of Total Company Combined 2006 ($Millions) Source: Alcoa analysis; Company
filings |
 23 Montreal Increased Commitment to Canada British Columbia Quebec Alcoa Alcan Shared Refinery Smelter 11 smelters 1 refinery Upstream in Canada Potential Investment • Saguenay–Lac-Saint-Jean region: AP50 pilot first step in ten-year, $1.8B program • Baie Comeau: $1.2B, 110kMT expansion and modernization • Deschambault: $1.4B, ~300kMT expansion Quebec • Kitimat: $1.8B, 123kMT expansion and modernization British Columbia Source: Company filings and press releases Largest private sector investment program in Quebec history |
 24 Dual headquarters in Montreal and New York – Strategic management functions in each city Significant Canadian Board representation Alumina and Primary Metals business based in Montreal – Would be the largest aluminum company in the World – $32.3 billion in total revenue – 38,000 employees operating in 29 countries Headquarters of Global Growth group – decision-making centered in Quebec Quebec becomes center of aluminum innovation – Alcan AP50 carbon smelting technology at the Complexe Jonquiere – Alcoa post carbon “inert anode” technology pilot deployment in Quebec Increased Commitment to Canada Corporate Presence Global Business R&D Center The Global Primary Products business headquartered in Montreal will be one of the largest companies in Canada |
    25 $6 billion diversified packaging group World’s leading producer in all markets served: – Food Flexible – Pharmaceutical – Beauty – Tobacco Remain Committed to Profitable-Growth Downstream Businesses Flat Rolled Products / Hard Alloy Extrusions Leading position in the “value added” products Technology Leadership – Proprietary alloys – Unique equipment capability Worldwide Presence – In fast growing markets of China & Russia Focus on the global transportation market Capitalizing on technically complex products and processes Provides significant opportunity for differentiation and growth Strong customer connections – “Branded Products” Engineered Solutions Alcan Packaging |
 26 The industry has changed significantly with emerging global players in Russia, China, India and the Middle East who are quickly expanding and adding capacity We have carefully considered the regulatory approvals We are prepared to make the necessary targeted divestitures in the appropriate industry segments We are already in contact with several regulatory agencies We are confident that the transaction will be approved Regulatory Approvals |
 Charles
D. McLane Vice President and Chief Financial Officer
|
 28 The Proposed Transaction Additional listing planned for the Toronto Stock Exchange Listings Fully committed bridge loan facility Committed to maintain investment grade status Financing We are in contact with the regulatory authorities Targeting completion by year end 2007 Timing 66-2/3% of Alcan shares tendered Customary government and regulatory approvals Key Conditions US$58.60 per share in cash and 0.4108 of a share of Alcoa common stock (1) – Total value of US$73.25 per share (2) – 80% cash / 20% stock Offer Premium 32%-premium-to-Alcan’s-30-day-average-trading-price 20%-premium-to-Alcan’s-closing-price-on-May-4--2007 (1) Alcoa will deliver C$ at closing at then current exchange rates to shareholders
electing to receive C$. (2) Based on Alcoa share price of $35.66 as of May 4 th 2007 (3) Based on NYSE closing prices (3) (3) th |
 29 Shareholder Value Creation EPS accretive within first year Cash flow per share accretive within first year $1 billion in synergies Greater linkage to a strong aluminum market Increased profitable growth opportunities Improved risk profile Immediate realization of significant premium Compelling cash value up front Participate in value creation through achieved synergies Ownership in the industry leader For Alcoa Shareholders For Alcan Shareholders |
 30 Compelling Value for Alcan Shareholders Note: Averages based on NYSE closing prices, per Bloomberg $40 $45 $50 $55 $60 $65 $70 $75 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 4-May-07 Close: US$61.03 30-Day Average: US$55.36 Offer Price: US$73.25 US$ / share 90-Day Average: US$52.32 32% Premium 20% Premium 40% Premium |
 31 $1 billion annual pre-tax synergies Includes overhead, manufacturing process optimization and procurement Phased in over 3 years One-time implementation costs approximately $1 billion $1 Billion of Defined & Achievable Synergies Direct materials Indirect materials $200 Procurement Eliminate redundant overhead costs Complementary technology $400 Overhead Productivity Comments Value ($mm) Type Leverage expertise from both companies to create more efficient combined company $1,000 Total Synergies Supply chain / logistics efficiencies Manufacturing overhead optimization Cross-Deployment of best practices $400 Manufacturing Process Optimization Overhead Manufacturing Procurement 40% 40% 20% |
 32 History of Successful Integration and Synergy Realization Pechiney Size: $6,400 Revenue: $12,766 Synergies: $400 % of Revenue: 3.1% Algroup Size: $4,500 Revenue: $5,146 Synergies: $200 % of Revenue: 3.9% Alumax Size: $3,800 Revenue: $3,004 Synergies: $110 % of Revenue: 3.7% Alcan Acquisitions Reynolds Size: $5,900 Revenue: $5,047 Synergies: $288 % of Revenue: 5.7% Cordant Size: $3,300 Revenue: $2,541 Synergies: $141 % of Revenue: 5.6% Fairchild Size: $650 Revenue: $571 Synergies: $67 % of Revenue: 11.7% Ivex Size: $790 Revenue: $643 Synergies: $34 % of Revenue: 5.3% Alcan Size: $33,200 Revenue: $23,641 Synergies: $1,000 % of Revenue: 4.2% 1998 1999 2000 2001 2002 2004 2003 2005 2006 2007 (US$ in mm) Note: % of sales represents synergies achieved as % of last twelve months revenue at time
of transaction Note: Size represents transaction size Source: Company filings and press releases Alcoa Acquisitions |
 33 A Winning Strategic Combination Creates the premier fully integrated aluminum company Enhanced cash flow and $1 billion in annual synergies Significant scale to compete in a changing environment Optimized portfolio of upstream assets Enhanced capacity for growth Strong technology, operations and talent Shared values and commitment to sustainability |
 34 A |
 35 In connection with the offer by Alcoa to purchase all of the issued and outstanding
common shares of Alcan (the “Offer”), Alcoa will be filing with
the Securities and Exchange Commission (the “SEC”) a registration
statement on Form S-4 (the “Registration Statement”), which contains a prospectus relating to the Offer (the “Prospectus”), and a tender offer statement on Schedule TO
(the “Schedule TO”). This communication is not a substitute
for the Prospectus, the Registration Statement and the Schedule TO that Alcoa will file with the SEC. ALCAN SHAREHOLDERS AND OTHER INTERESTED PARTIES ARE URGED TO READ THESE DOCUMENTS, ALL OTHER APPLICABLE DOCUMENTS (AND ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS), WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ALCOA, ALCAN AND THE OFFER. Materials filed with SEC will be available electronically without charge at
the SEC’s website, www.sec.gov. Materials filed with the Canadian securities regulatory authorities also
will be available electronically without charge at www.sedar.com.
Materials filed with the SEC or the Canadian securities regulatory
authorities may also be obtained without charge at Alcoa’s website, www.Alcoa.com, or by directing a request to Alcoa’s investor relations department at 212 836 2674. In
addition, Alcan shareholders may obtain free copies of such materials filed
with the SEC or the Canadian securities regulatory authorities by directing a written or oral request to the Information Agent for the Offer, MacKenzie Partners, Inc., toll-free at (800) 322-2885 (English) or (888) 405-1217
(French). While the Offer is being made to all holders of Alcan Common
Shares, this communication does not constitute an offer or a solicitation in
any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made in, nor will deposits be accepted in, any jurisdiction in which the making or
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, Alcoa may, in its sole discretion, take such
action as they may deem necessary to extend the Offer in any such jurisdiction. Where to Find Additional Information |