Canadian aluminum giant Alcan turned down a 27.4 billion dollar takeover offer from its US rival Alcoa, saying that the deal was "not in the best interests of its shareholders."

Late Tuesday, Alcan chairman Yves Fortier said that Alcoa’s offer did not "adequately reflect the value of Alcan's assets". Alcoa's bid had valued Alcan at 74.70 dollars per share. Fortier added he was "considering all options" in the interests of shareholders.

"Furthermore, it is clear to us that that Alcan and Alcoa have fundamentally different approaches and track records in creating shareholder value," he said.

"We continue to believe that our offer is full, fair and provides attractive value to Alcan shareholders," said Alcoa spokesman Kevin Lowery.

"Despite two years of approaches by Alcoa, at no time was Alcan presented a compelling proposal – either in terms of economics, structure or conditionality – that was in the best interests of our shareholders," said Dick Evans, Alcan's president and chief executive officer.

Alcoa's offer falls well short of Alcan's current share price of 83.5 dollars on the New York Stock Exchange, up by 3.05 per cent after closing Tuesday. Alcoa shares rose by 1.77 per cent after closing on New York Stock Exchange Tuesday to 39.64 dollars.

Alcoa founded Alcan in 1902, split it off as a separate company in 1928, and retained largely common ownership until 1951 when major shareholdings were divested by U.S. court order because of antitrust issues.

Alcoa had been the world's largest aluminum concern, followed by Montreal-based Alcan, but both firms were surpassed by OAO Russian Aluminum after a merger in March. The deal which was proposed on May 7 would have put Alcoa back on top of the aluminum market.