Nemak to Acquire Hydro Casting Plants

Nov. 27, 2006
Refocusing on primary operations, Hydro may net $143 million

November 27, 2006 — Aluminum casting giant Nemak has made its second significant purchase in less than a month with an agreement to buy Norsk Hydro ASA's European automotive castings business for an undetailed price. Together with a separate sale, Hydro expects to net a reported $143 million for its engine block and cylinder casting operations.

Nemak - a joint venture of Mexico's Grupo Alfa and Ford Motor Co. - already has a deal in place to acquire six aluminum casting plants from TK Aluminum Ltd. for nearly $500 million. Now, it will be acquiring Hydro's plants at Charlottenberg, Sweden; Dillingen, Germany; Gyr, Hungary; and Linz, Austria — significantly expanding its base in Europe. It now operates at Most, Czech Republic; Wernigerode, Germany; and Ziar, Slovakia, and is due to acquire a TK Aluminium plant in Bielsko-Biala, Poland.

In a separate deal, Hydro will sell its 49.99% share of the Castech S.A. joint venture in Mexico to its partner Grupo Industrial Saltillo.

Both arrangements await regulatory approval.

Hydro announced two weeks ago it would sell the automotive castings business as part of strategy to concentrate on its upstream (i.e., primary aluminum) organization.

“Our automotive castings operations are in the forefront in the industry and have delivered strong results,” stated Hydro exec. v.p. -Aluminium Products, Svein Richard Brandtzg. “As Hydro is reducing its engagement in downstream aluminium, I am pleased that we have found good industrial solutions for the castings business to further develop through increasingly global operations.”