Pittsburgh’s aluminium pioneer Alcoa Corp announced this week that it has agreed to sell its rolling mill business to California’s Kaiser Aluminum for about US$670 million.
Alcoa said it will sell the rolling mill business held by Alcoa Warrick LLC to Kaiser for a cash payment of US$587 million and an agreement to take over US$83 million in pensions and other post-retirement benefits from the Indiana plant.
The sale this week does not include the aluminium smelter nor the power-generation plant. Alcoa said it would negotiate later with Kaiser on a land lease for their operations at the site. The two firms will soon come to a market-based metal supply agreement as well.
Alcoa’s sale of the Warrick rolling operation was part of its objective of raising between US$500 million and US$1 billion via the transfer of non-core assets. CEO Roy Harvey elaborated in a related press release.
“The sale will achieve a key target in our strategy to focus on core markets while generating additional cash. We look forward to having Kaiser Aluminum as a valued customer at Warrick Operations, and we thank all of the employees who have contributed significantly to the site’s 60-year history of manufacturing excellence.”
The Warrick rolling mill produces about 310 thousand metric tons per annum of flat-rolled aluminium, which is primarily used in food and beverage packaging. Its 1,170 workers run a casthouse, hot and cold mills, and coating and slitting lines.
Assuming no delay in regulatory approval, Alcoa expects the sale to be completed by next summer. Along with it the firm expects to lose about US$800 million in sales, between US$45 million and US$55 million in net income, and adjusted EBITDA of between US$45 million and US$55 million. Site separation and transaction costs are expected to total around US$100 million.