A new, unexpected contender joined the ongoing battle to buy Richmond-based Reynolds Metals Co., with investment firm Michigan Avenue Partners yesterday making an all-cash offer that it said is higher than one made by Alcoa Inc.

The Chicago-based firm, which has been buying aluminum assets over the past 18 months, did not disclose the details of its bid. But various industry estimates put the new offer at between $68 and $72 a share, and several analysts expect the bidding to go even higher.

"We are there to support Reynolds Metals," said Michael W. Lynch, chairman of Michigan Avenue Partners, indicating that his firm may be playing the role of white knight. Lynch said his firm will not make a hostile attempt at a takeover if Reynolds Metals shareholders reject his offer.

"One thing being highlighted is that Reynolds Metals' assets are worth far more than what Alcoa has put on the table," said Vahid Fathi, mining and metals analyst at ABN Amro.

Aluminum giant Alcoa offered $65 a share in cash and stock for Reynolds Metals on Wednesday. Analysts expect the bids for Reynolds to go as high as $75 a share, with an upper limit of $85. "Anything above $85 would be too much," Fathi said.

Shares of Reynolds halted trading for an hour yesterday on the New York Stock Exchange, pending news of a deal, though it resumed later in the afternoon and the shares closed up $3, or 4.5 percent, at $69.37 1/2. The company's board is to meet tomorrow to consider the offers from Alcoa and Michigan Avenue. Shares of Alcoa fell $1.25, to $66.50. Reynolds Metals stock has gained more than 25 percent since Tuesday, when it closed at $55.87 1/2. The stock dropped to as low as $40 in March before experiencing a turnaround.

Over the past several years, Reynolds Metals has sold many of its subsidiaries to reduce debt and focus on its core business. Last year, the company--which is best known for its Reynolds Wrap brand of aluminum foil--had revenue of $5.85 billion.

Alcoa's offer Wednesday came just hours after its Montreal-based competitor, Alcan Aluminium, agreed to buy French rival Pechiney and Switzerland-based Algroup's aluminum and packaging units for $9.2 billion in stock. Such a transnational merger would dislodge Alcoa as the industry leader.

Industry watchers expect Alcoa to come up with a revised offer, since Alain J.P. Belda, the company's chief executive, has expressed a keen interest in the acquisition.

Analysts foresee three possible outcomes to Michigan Avenue Partners joining the fray. One, Alcoa could be forced to raise its offer. Two, another company, such as Alcoa, could push the bidding even higher. Three, the investment banking firm could acquire Reynolds Metals, but bundle out portions of it to willing buyers at higher per-unit prices.

Lynch, however, said Reynolds Metals would be a long-term investment for his firm. "I intend to be a vicious competitor [to the aluminum majors]," Lynch said.

The priority for aluminum companies at the moment is to expand their product portfolio and, thus, customer reach. As a result, the aluminum industry worldwide is riding a merger wave, with the larger firms trying to acquire smaller competitors. Fewer but bigger players in the market would mean better economies of scale and reduced costs. Consolidation of capacities will help top aluminum manufacturers cater more efficiently to their global customers, thus protecting their profit margins.