Kaiser Aluminum Corp., will acquire the Alcoa Warrick rolling mill near Evansville, Ind. The purchase price is $670 million, including $587 million in cash and the assumption of $83 million in debt.
The sale is expected to close by the end of the first quarter of 2021, pending regulatory approval and customary closing conditions.
Alcoa will retain ownership of the site’s 269,000-metric-ton-per-year aluminum smelter and its electric generating units. Alcoa will also enter into a ground lease agreement with Kaiser for property that Alcoa will continue to own at the Warrick site.
Warrick, located near Evansville, Indiana, has a leading position in the North American aluminum packaging industry. In the last twelve months, Warrick shipped over 675 million pounds of aluminum, of which approximately 60 percent was coated packaging products. The facility includes casting, significant hot and cold rolling capacity, and a range of finishing and coating lines.
“With Warrick’s solid market position, highly favorable market dynamics and a strong and culturally compatible management team, the acquisition provides us an opportunity to significantly enhance and diversify our portfolio,” said Keith A. Harvey, president and CEO. “The addition of a non-cyclic packaging business is highly complementary to our existing aerospace, automotive and general engineering cyclic end markets and provides excellent opportunities for long-term growth and synergy with our existing operations.”
For Alcoa, the sale is part of the company’s strategy to generate between $500 million and $1 billion in cash through the divestiture of non-core assets and will put total cash proceeds in the target range. Earlier this year, Alcoa announced the sale of its former waste treatment business in Gum Springs, Ark.
“The sale will achieve a key target in our strategy to focus on core markets while generating additional cash,” said Alcoa President and CEO Roy Harvey. “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.”
As part of the transaction, Alcoa will enter into a market-based metal supply agreement with Kaiser Aluminum at closing. Alcoa will continue to operate the smelter and the power plant, which together employ approximately 660 people.
Approximately 1,170 employees at the rolling operations, which includes the casthouse, hot mill, cold mills, and coating and slitting lines, will become employees of Kaiser Aluminum once the transaction is complete. The rolling mill produces approximately 310,000 metric tons of flat rolled aluminum annually for use in packaging, including food containers, aluminum cans, and bottles.