Canadian Stocks Advance on Speculation Alcan May Be Taken Over

Canadian stocks rose the most in three weeks, led by Alcan Inc., on speculation the aluminum maker may become the latest takeover target in the industry, following a report that a bid was being prepared for rival Alcoa Inc.

``It could happen,'' said Ted Macklin, who helps manage about $14 billion including Alcan shares as managing director at Guardian Capital Inc. in Toronto. Takeovers of materials producers have ``been going on all year,'' he said. ``There's certainly a scarcity of assets in that space.''

The Standard & Poor's/TSX Composite Index advanced 131.22, or 0.1 percent, to 13,171.76 in Toronto. The benchmark rebounded from two days of losses to gain the most since Jan. 23. It is 0.1 percent below its record close set last week.

Alcan, the world's second-biggest aluminum maker climbed C$2.65, or 4.3 percent, to C$63.90, after the Times of London said that bigger rival, Alcoa, may get offers from BHP Billiton and Rio Tinto Group.

A five-year rally in metals prices spurred more than $157 billion of takeovers and merger plans in the industry last year. BHP and Rio Tinto, the world's biggest and third-biggest miners respectively, said this month they are looking at purchases.

Yesterday Novelis Inc., a maker of flat-rolled aluminum products spun off from Alcan in 2005, agreed to be bought for more than $3.4 billion by India's Hindalco Industries Ltd.

BHP and Rio Tinto have both drawn up plans for a $40 billion bid for New York-based Alcoa, The Times said, citing unidentified people. The three companies declined to comment.

Attractive Target

Alcan may be a more attractive takeover target than Alcoa, because it's seen by some as ``a better fit'' for a globally diversified metals company, said Macklin, whose firm last year reduced its holdings in materials stocks. When takeovers happen, it's a welcome ``windfall, though it's not something to hang you hat on as an investor.''

The value of mergers and acquisitions involving Canadian companies was $296.5 billion in 2006, almost double the $151.3 billion in 2005, according to Bloomberg data. Some of the largest recent deals involved metals companies. Nickel miners Falconbridge Ltd. and Inco Ltd. were bought for $18 billion and $16.7 billion, respectively, by Switzerland-based Xstrata Plc, and Brazil's Cia. Vale do Rio Doce.

Teck Cominco Ltd. shares rose C$3.77 to C$86.45. The zinc and copper miner reported that fourth-quarter profit rose to a record C$866 million from C$510 million a year earlier. It also plans to buy back as many as 20 million Class B shares and split Class A common shares and Class B subordinate voting shares 2-for-1.

Copper for delivery in three months gained 5.1 percent to $5,749 a metric ton in London, the most in seven months, on signs of rising demand for raw materials in China. Aluminum also rose.

Goldcorp

Bullion miners gained on higher gold prices. April gold futures rose 0.2 percent to $668.50 an ounce in New York.

Goldcorp Inc., Canada's second-biggest producer of the precious metal, increased 25 cents to C$33.25. Barrick Gold Corp., the world's largest producer, rose 48 cents at C$36.12.

Blue Pearl Mining Ltd. climbed 68 cents, or 9.5 percent, to C$7.85 for the top gain in the S&P/TSX. The molybdenum producer was rated new ``buy'' in new coverage by David Charles at GMP.

Nine of the top-10 gainers in the S&P/TSX were materials companies, as a measure of materials stocks added 1.9 percent, the most among 10 industry groups in the S&P/TSX.

Not all materials companies advanced.

SXR Uranium One Inc. dropped 26 cents to C$14.53 after analyst Muneer Ismail at Deutsche Bank lowered his rating on the shares to ``hold'' from ``buy.'' The uranium miner's shares climbed as much as 12.4 percent yesterday after SXR offered to buy Vancouver-based UrAsia Energy Ltd. for $3.1 billion in stock.

Coal Exporter

Fording Canadian Coal Trust lost 59 cents to C$26.60. Profit at the majority owner of the world's second-biggest coking coal exporter fell by more than half as prices dropped. Energy shares rose with oil prices. Crude oil for March delivery added 2.2 percent to $59.06 a barrel in New York, after the International Energy Agency increased its forecast for global oil consumption this year. EnCana Corp., Canada's biggest natural-gas producer, advanced 97 cents at C$57.06. Suncor Energy Inc., the world's second-largest oil-sands producer, rose C$2.15 to C$86.58.

Western Oil Sands Inc. increased C$1.69, or 5.2 percent, to C$34.50. The oil-sands producer last week said it hired advisers for a possible merger, or the purchase or sale of assets.

A gauge of energy stocks climbed 1.1 percent. Energy and materials stocks account for more than two-fifths of the S&P/TSX.

Brookfield Asset Management Inc. rose C$1.45 at C$60, after U.S. mall owner Mills Corp. said it favors a $1.56 billion bid from Simon Property Group Inc. and Farallon Capital Management LLC over Brookfield's $1.35 billion offer. It was raised to ``outperform'' from ``market perform'' by Wachovia Securities.

In the event Mills sells to anyone but Brookfield, it would owe Brookfield a termination fee of $65 million. On March 1, that fee increases to $90 million, and on April 15, it rises again, to $120 million.

The following shares had unusual price changes. Stock symbols are in parentheses.

Imaging Dynamics Company Ltd. (IDL CN) slipped 18 cents, or 7.9 percent, to C$2.10. The maker of digital radiography systems said in a statement that Stuart Hensman resigned as director and chair of the company's audit committee. Garry Zurowski was named new audit committee chair. The company was cut to ``sell'' from ``hold'' by Douglas Loe at Versant Partners.

JumpTV Inc. (JTV CN) lost 71 cents, or 7.3 percent, to C$8.99. A group of brokers agreed to buy 13.04 million JumpTV shares at C$9 each, raising C$117.4 million for the Internet television company. JumpTV said in a statement that it may sell another C$17.6 million worth of stock to the underwriters. Proceeds may be used to make acquisitions, and ``significant discussions'' have been held with certain possible targets, JumpTV said. Additional equity may dilute existing shareholders.

source:www.bloomberg.com