The world''s second-largest aluminium producer Alcoa Inc has made an unsolicited $26.9- billion cash and stock offer for Alcan Inc, Alcan the world''s second-biggest aluminum company by 2006 revenue, that would create an entity with twice the capacity of OAO Russian Aluminum.

Under the offer each Alcan share would be exchanged for $58.60 in cash and 0.4108 of an Alcoa share, valuing Alcan at $73.25, or at $33 billion, including debt.

With the more than doubling of aluminium prices in the past four years Alcoa has forecast a $1-billion in savings within three years of acquiring Alcan.

Alcan was created from Alcoa-owned assets when the company was ordered by U.S. regulators in 1928 to be broken with its Canadian and overseas assets forming a separate company.

In a prepared statement, Alain Belda, chief executive officer, Alcoa, said "For almost two years of discussions between our companies regarding a variety of potential business combination transactions, including unsuccessful board-level discussions of a merger last fall. We are disappointed that those efforts did not result in a negotiated transaction.''''

A combination of the two companies would create a company with 7.8 million tons of production capacity and $54 billion in sales.

Earlier in March, OAO Russian completed a three-way merger overtook Alcoa as the world''s largest aluminium producer when Russia''s Rusal completed a merger with OAO Sual Group and the alumina business of Glencore International AG.

Rusal produces about 4 million metric tons a year, compared with Alcoa''s 3.5 million tons.