L’orgie protectionniste de la semaine dernière s’étant quelque peu dissipée, posons-nous la question: la prise de contrôle d’Alcan par Alcoa est-elle si mauvaise pour le Canada? Bien sûr que non…
To consummate the deal will require converting US$33-billion into its Canadian equivalent, increasing the demand for Canadian dollars and hence their price. Anticipating the event, currency markets priced the dollar accordingly…
The same phenomenon was played out in the equity markets. Anticipating a bidding war, investors marked up the price of Alcan stock beyond even the 20% premium implied by Alcoa’s offer: the stock closed at $90.57, up 34% on the day. The effects spilled over into the broader market: The S&P/TSX composite index jumped more than 95 points, or 0.7%. On a market capitalization in excess of $2-trillion, that works out to an additional $16-billion in shareholder wealth.
All told, then, in addition to the roughly $8-billion windfall for Alcan shareholders, the Alcoa bid enriched shareholders in other Canadian companies, including the mutual funds and pension plans through which millions of Canadians invest their savings, by approximately the same amount. And that’s not all. An increase in the purchasing power of the Canadian dollar means imports cost less: on roughly $265-billion in merchandise imports from the US a year, a half-cent rise in the dollar translates into savings of more than $1-billion annually for Canadian consumers.
Or in other words, a national catastrophe.
