Aluminum merger and acquisition activity accelerates
By Tom Stundza -- Purchasing, 10/7/1999
There have been a series of moves to rationalize the world aluminum industry over the past few years. Here's a brief rundown of what happened and when:August 1999: Alcoa reaches definitive merger deal, offers to buy Reynolds Metals in a transaction worth $4.4 billion. The deal will firmly re-establish Alcoa as the world's leading primary aluminum producer. Alcoa expects to make cost and efficiency savings of $200 million (pre-tax) by end of second year.
Alcoa signs a memorandum with the Egyptian government to study the possibility of buying a stake in Egyptian aluminum producer Egyptalum. Final agreement is possible by early 2000.
Alusuisse confirms in advanced talks with Alcan and Pechiney for three-way merger. If the deal goes ahead, the new APA would rival Alcoa in aluminum and produce a leading world player in packaging.
July 1999: Pechiney, the world's fourth-largest aluminum firm, spends $248 million to buy two processing businesses from smelter Century Aluminum to expand the French firm's reach in the U.S. market. Century sells Ravenswood, W.Va., rolling mill and a cast-plate mill in Vernon, Calif., which had combined 1998 sales of $562 million.
June 1999: Voluntary liquidation of Bahrain Saudi Aluminium Marketing Co. (Balco) is completed, paving way for merger with Aluminium Bahrain (Alba). Alba is Middle East's largest aluminum smelter, with capacity of 500,000 metric tons per year. Balco had marketed its output since 1976. Deal is expected to cut costs and improve overall efficiency. Bahrain government owns 74.33% of Balco and 77% of Alba.
British Steel and Dutch aluminum and steel producer Hoogovens announce plans to merge. Deal will create world's third largest and Europe's largest steel producer. British Steel will hold 61.7% of new group, BSKH, while Hoogovens will hold 38.3%. Hoogovens aluminum business--Voerde primary smelter in Germany (80,000 tonnes/year), Delfzijl primary smelter in Netherlands (97,000), plus downstream operations--would be kept, despite speculation of sell-off. Merger expected to be completed in the autumn of 1999.
Glencore had been expected to complete its acquisition of Columbia Falls Aluminum by now, subject to successful transfer of necessary permits and regulatory approvals. But deal isn't yet finalized.
Romania's State Ownership Fund approves plans for ALRO primary aluminum smelter to merge with Alprom, local rolling mill. Plans initially announced November 1998. Share allocation ratio to be set in September 1999. Deal expected to boost profits and turn operation into attractive investment ahead of planned privatization late 1999.
March 1999: Planned merger, announced in January 1999, between Switzerland's Alusuisse-Lonza Group (algroup) and Germany's Viag, called off because two parties could not agree how to value deal.
October 1998: Nippon Light Metal (NLM) and Toyo Aluminum, affiliates of Alcan, announce they will merge on October 1, 1999. Ahead of merger, Toyo obtains 134 million shares in NLM from Alcan (around half latter's stake) and becomes major shareholder. Both firms are producers of fabricated aluminum, but NLM also owns sole remaining primary aluminum smelter in Japan, with 18,000 tonnes/year capacity.
July 1998: Alcoa completes $3.8 billion cash and stock acquisition of Alumax, fourth-largest producer in the United States. Before deal, Alcoa had around 2.5 million tonne of annual capacity and Alumax about 700,000.
February 1998: Alcoa finalizes purchase of Spain's state-owned producer Inespal for $410 million. Sale involves three primary aluminum smelters with combined capacity of about 363,000 tonnes/year, an alumina refinery, and downstream operations.
December 1997: Furukawa Electric and Sky Aluminum announce cooperation agreement to create Japan's biggest rolled aluminum producer, surpassing Kobe Steel. Deal is designed to cut costs and boost competitiveness. Sky Aluminum is 37% owned by Showa Denko and 36% by Nippon Steel.
December 1995: EU approves Alcoa's proposed acquisition of Italy's state-owned Alumix for around $280 million. Deal includes Portovesme and Fusina primary aluminum smelters, with combined capacity of 170,000 tonnes/year, plus rolling mill and extrusion plants.
RTZ Corp and its 49%-owned Australian offshoot CRA merge. Deal is designed to broaden activities and reduce risk. RTZ-CRA is subsequently renamed Rio Tinto. RTZ's main focus is copper and gold, while CRA's is iron ore, aluminum, and coal. Aluminum interests in Australia are held through Comalco, in which Rio Tinto holds 72.36% stake.
SOURCE: REUTERS, BLOOMBERG, PURCHASING
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