Alcoa explores aluminum mega-deal.

Alcoa, North America's largest aluminum company, is preparing a bid to acquire Alcan Inc. in a deal that would consolidate North America's two largest aluminum producers.

According to a Reuters report, Pittsburgh-based Alcoa is preparing an estimated $27 billion offer for Montreal-based Alcan. The bid, considered hostile from the point of view of Alcan's management, is being prepared after lengthy talks between the two did not produce an agreement.

"We are very disappointed that those efforts did not result in a negotiated transaction--a conclusion we would have strongly preferred," Alcoa chairman and CEO Alain J.P. Belda said.

If the two companies were to combine, it would create the world's largest producer of aluminum, according to Reuters, surpassing Russian company Rusal.

"We believe firmly in the compelling strategic rationale behind the combination of Alcoa and Alcan and are convinced that this transaction creates substantial value for both sets of shareholders and for our customers around the world," added Belda in his statement. "We are therefore taking our offer directly to Alcan shareholders."

Some observers have questioned whether the two North American companies can clear anti-trust hurdles, which is why Australia's BHP Billiton was at one time considered a more likely buyer of Alcan.