Norway’s Norsk Hydro ASA announced an agreement yesterday with compatriot Orkla Group to purchase the firm’s 50-percent interest in Oslo’s Sapa AS, making Hydro the full owner of the largest aluminium extrusion-based solutions company in the world.
Hydro tendered Orkla NOK27 billion (US$3.2 billion) for the latter’s half of the venture as part of a deal that Hydro expects to complete in the current half of this year. The firm cites synergies of NOK200 million (US$24 million) per year, mainly in the areas of aluminium remelt and recycling, and strong cash generation from the opening gate as being among the reasons for making the deal. Also key is Sapa’s significant customer base, growth potential, and sustainable aluminium-production processes.
“Hydro is now confirming its position as the world’s leading integrated aluminium company and the transaction reinforces our strategic direction Better, Bigger and Greener, with a solid asset base, unique competencies and capabilities from mining to end-user products,” said Hydro’s President and CEO Svein Richard Brandtzæg. “Sapa will enable us to assume global leadership, establish a platform for growth, and provide responsible operations and sustainable solutions for the future low-carbon economy.”
This transaction will result in Hydro’s status as the world’s lone global aluminium firm that is fully integrated across the aluminium value chain and markets. According to Hydro, such a status will boost the firm’s research and development prowess in addition to enhancing the type and quality of products it offers to its over 30,000 customers globally. In addition, the transaction will make the firm a behemoth in the aluminium industry, increasing its workforce to 35,000 individuals in locations spread across over three dozen countries.
“Sapa has successfully restructured its business and lifted profitability and is now well-positioned to continue its journey as part of Hydro, aiming for even higher value creation through targeting high-tech, high-competence value-add market segments,” explained Brandtzæg.