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Alcan to Create Rolled Products Company
MONTREAL -- Alcan Inc. plans to pursue a spin-off to its shareholders of substantially all of the rolled products businesses held by Alcan prior to its acquisition of Pechiney. The proposed distribution will create the world's largest aluminum rolled products company with revenues of more than $6 billion, according to Travis Engen, president and chief executive officer. Alcan will continue to focus on developing its portfolio of low cost alumina and primary aluminum businesses as well as its high value-added specialty packaging, aerospace and engineered products businesses."The transaction reflects the different business characteristics of the new company and those of the on-going Alcan," Engen said. "It also provides our shareholders with two distinct investment alternatives and increased dividend flows." The new company, to be named later, will be the world's largest aluminum rolling business by revenue and production volume. It will enjoy market leadership positions in the Americas, Europe and Asia, and be a leader in the beverage can, automotive sheet, foil-stock, lithographic sheet, painted sheet, and industrial products markets, Engen said. Based on a business model more appropriate to its nature as a metal converter and tailored to its specific markets and customer relationships, the new company will be capable of returning substantial value to shareholders. It is expected to deliver strong and stable cash flows from a financial profile that is relatively unaffected by changes in metal prices.The plan is for the new company to be based in Canada with executive offices in the United States. Applications are planned to list the shares of the new company on the New York and Toronto stock exchanges. The company will have approximately 10,000 employees worldwide.The on-going Alcan, with its global headquarters and executive offices in Montreal, will continue as a producer of bauxite and alumina, holding the world's largest share of low-cost aluminum production. Alcan will retain its strong and growing engineered products business with a significant presence in the aerospace industry, as well as its flexible and specialty packaging business. Following the separation, Alcan will have 78,000 employees globally and revenues of approximately US$20 billion."With the Pechiney acquisition completed, the circumstances are ideal for executing a transaction of this nature and unlocking value for our shareholders," Engen stated. "We will be able to pursue our post-acquisition integration efforts with increased effectiveness and no material impact on our projected synergies. Equally important are the opportunities it creates for our employees. In addition, the transaction, as structured, is expected to meet our undertakings with the European Commission and create potential new solutions to our U.S. divestment obligation."Brian W. Sturgell will become the chief executive officer of the new company. He has spent virtually all of his 33-year career in the aluminum business and has been with Alcan for 15 years. Ted Newall will serve as the new company's non-executive chairman of the board. Newall has been a member of the Alcan Board of Directors since 1985. Additional members of the new company's executive management along with its independent board of directors will be named later.The intended spin-off will be in the form of a pro-rata distribution of common stock of the new company, which is expected to be available on a tax neutral basis to the majority of Alcan shareholders. The capital structure of the two companies at the time of the spin-off will be optimized according to their respective financial requirements and opportunities. As part of the transaction, it is contemplated that the new company will raise external debt that will be utilized to refinance certain indebtedness. "