Thursday October 4, 11:49 PM
Alcoa to shed units in wide-ranging restructuring
NEW YORK (AFP) - US aluminum giant Alcoa (NYSE: AA - news) said Thursday it was preparing to sell its packaging and consumer operations as part of a wide-ranging reorganization.
Alcoa said it is is "near a definitive agreement" to sell its automotive castings business by the end of the year.
The company said it would divest its packaging and consumer operations which produce items like aluminum foil and packaging for the food and health care industries, among others.
The US metals giant said the decisions come after a strategic review, and that it has "received strong indications from strategic buyers" for the packaging and consumer businesses.
The move came weeks after Alcoa announced it was selling its stake in Aluminum Corporation of China Limited (Chalco).
The changes are part of an effort to "further enhance its capital structure and provide additional opportunities to improve shareholder value."
They come after a failed bid for Canadian rival Alcan (AL.TO - news) , which has agreed to merger with Anglo-Australian Rio Tinto, and amid a wave of consolidation in the sector benefitting from surging commodity prices.
Alcoa said it also plans to "significantly restructure" its Electrical and Electronic Solutions wire harness business, formerly Alcoa Fujikura Limited, in the Americas and Europe "to improve returns and profitability."
The changes "will be carried out in consultation with the unions and works councils as required by applicable US, European and local rules and regulations," Alcoa said.
Alcoa will set aside 195 million dollars for the changes in the Electrical and Electronic Solutions business; 50 million for charges related to the automotive castings business; and 600 million related to the planned sale of the packaging and consumer business.
"These portfolio actions, combined with the sale of Alcoa's stake in Chalco, will significantly enhance the company's capital structure and add flexibility for both growth opportunities and other initiatives to improve shareholder value," Alcoa said.
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