The sale of rolling mill business forms part of Alcoa’s plan to generate between $500m and $1bn in cash through the sale of non-core assets and focus on core markets
Alcoa, a provider of bauxite, alumina, and aluminium products, has agreed to divest its rolling mill business in the US to Kaiser Aluminum in a deal worth approximately $670m.
Held by Alcoa unit Alcoa Warrick, the rolling mill is located at Warrick Operations, an integrated aluminium manufacturing site near Evansville, Indiana.
Employing approximately 1,170 people, the rolling operations include the casthouse, hot mill, cold mills, and coating and slitting lines.
The rolling mill is capable of producing approximately 310,000 metric tons of flat-rolled aluminium annually that is used in packaging, including food containers, aluminium cans, and bottles.
The deal includes $587m in cash and assumption of $83m in other postretirement employee benefit (OPEB) liabilities.
The sale of rolling mill business forms part of Alcoa’s plan to generate between $500m and $1bn in cash through the sale of non-core assets and focus on core markets.
However, ownership of the site’s 269,000 metric ton per year aluminium smelter and its electric generating units will be retained by Alcoa.
Additionally, Kaiser Aluminum will sign a market based molten aluminium supply agreement as well as a long-term ground lease deal with Alcoa, as part of the transaction.
Kaiser Aluminum president and CEO Keith A Harvey said: “The addition of a non-cyclic packaging business is highly complementary to our existing aerospace, automotive and general engineering cyclic end markets and provides excellent opportunities for long-term growth and synergy with our existing operations.”
Kaiser Aluminum said that the acquisition marks the entry into the North American aluminium packaging industry while providing an opportunity to significantly enhance and diversify its portfolio.
Subject to regulatory approval and customary closing conditions, the sale is planned to be closed by the end of the first quarter of 2021.
Credit Suisse Securities (USA) acted as exclusive financial advisor to Alcoa for the transaction and Jones Day served as legal counsel.
Jefferies is acting as exclusive financial advisor to Kaiser Aluminum for the transaction, McDermott Will & Emery is acting as its legal advisor, and Deloitte & Touche is acting as diligence and transition advisor.