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From Staff Reports
Just what motivated Alcoa Inc (AA) to dump its stake in China's biggest aluminum company this week is not clear, but the $1.8 billion cash infusion should appease suffering stockholders while giving the aluminum giant maneuvering room.
It's only been a few months since Alcoa's hostile attempt to buy Canadian rival Alcan Inc (AL) was undercut by an even bigger offer from a bigger company – Rio Tinto LTD PLC RTP – and called into question just what Alcoa's strategy should be.
The conjecture now is that Alcoa may take the cash proceeds from the sale of its roughly 7% stake in the Aluminum Corp of China LTD ACH to and a share buyback or fund capital spending and restructuring.
Alcoa shares soared more than 35% after speculation that its proposed hostile takeover of Alcan was a defensive play to prevent its takeover by a larger company such as BHP Billiton Ltd BHP, have pared those gains in the last two months as rumors were put to rest.
Analysts said the company never got what it wanted out of the investment. It was unable to garner more control or create more strategic ties with a company with which it competes.
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