Pechiney buys aluminum units from Century
By Staff -- Purchasing, 9/2/1999
Pechiney, the world's fourth-largest aluminum producer, will spend $248 million to buy two processing businesses from Century Aluminum. The deal--an attempt to expand the French firm's reach in the U.S. market--includes Century's Ravenswood, W.V., rolling mill and a cast-plate mill in Vernon, Calif., with combined sales of $562 million last year.Century Aluminum's sale of its fabricating businesses will eliminate existing debt and leave around $120 million for the company to pursue its strategy of diversified investments, said CEO Craig Davis in a conference call with analysts and reporters. Paris-based Pechiney, with sales of $10.9 billion last year, is trying to broaden its offering of processed aluminum products, especially in North America, since processed metals are more profitable than raw aluminum. "The deal makes strategic sense for Pechiney and a lot of financial sense for Century," says Lloyd O'Carroll, chief economist and analyst with Scott & Stringfellow in Richmond, Va.
After the sale, Century will maintain its 168,000 metric ton/year Ravenswood primary ingot reduction plant, as well as a 26.7% interest in a 210,000 tonne/year-reduction plant in Mount Holly, S.C.
Pechiney CEO Jean-Pierre Rodier says plans include investments to modernize the Ravenswood rolling mill, which now can produce as much as 270,000 tonnes/year of rolled aluminum sheet and plate for aerospace and transportation customers. The cast-plate division can produce as many as 7,000 tonnes/year of thicker products used mainly in heavy machinery and industrial equipment.
Rodier says the acquisition highlights Pechiney's strategy to develop strong positions as a global supplier of high value-added products. "It substantially increases our industrial base (the Issoire and Neuf-Brisach plants in France), broadens our line of key products, and allows Pechiney to benefit from a balanced industrial position in two major geographic markets--Europe and North America."
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