Deal Near for Alcoa Automotive Castings Sale

Restructuring of aluminum producer


Alcoa Inc. reports it is proceeding with the multi-faceted restructuring effort that aims to reposition the company as a producer of primary aluminum, taking the emphasis off the various semi-finished and fabricated product areas into which it diversified over the past decade. The sale of Alcoa Automotive Castings, first announced in April, is said to be near the point of a definitive agreement.

No details of the potential sale were revealed.

Alcoa's restructuring is viewed by analysts as an effort to return the organization to its core businesses — mining bauxite, refining alumina, smelting aluminum — which now are higher profit-margin activities than aluminum semi-finished products and components. Restructuring also may prepare Alcoa to seek, or defend against, a takeover.

Both the castings division and Alcoa's Packaging and Consumer Products division may be sold by the end of this year, it said, adding that it was now preparing to restructure its Electrical and Electronic Solutions operations in North and South America and Europe.

The sale of the businesses will result in after-tax restructuring and impairment charges of $845 million, however, and Alcoa characterized this decision as "enabling it to focus on new growth opportunities."

"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 in a statement.

In September, Alcoa sold its 7% stake in the Aluminum Corp. of China (Chalco) for $2 billion.

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