California semi-fabricated specialty aluminium producer Kaiser Aluminum finalized the purchase of Alcoa Corporation’s Warrick plant earlier this week. Kaiser bought the aluminium rolling mill from Alcoa for US$670 million.
Though Kaiser purchased the mill, Alcoa retains ownership of the assets at the plant, the power plant on site, and the land upon which it all sits. Kaiser will now lease the land in a long-term agreement, and Alcoa is negotiating with the firm on a market-based purchasing contract for molten aluminium.
Keith A. Harvey, President and Chief Executive Officer, explained in a related press release the rationale for the deal.
“Today we begin a new chapter in our history as we welcome 1,200 Warrick employees to the family. The acquisition provides us with a strategic re-entry into the attractive aluminum packaging industry with excellent opportunities for further growth and significantly enhances, diversifies and reduces the cyclicality of our portfolio.”
“The outlook for the beverage and food packaging markets is strong with favorable demand and industry dynamics driving growth,” he continued. “The Warrick rolling mill is one of only four dedicated can sheet mills in and we expect to become a significant participant in the supply chain solution in meeting the growing North American demand.”
The two firms concluded the agreement on Wednesday. Kaiser funded the deal with a combination of cash on hand and assumption of other post-employment benefits (OPEB) liabilities.