Alcoa Corporation announced an agreement to sell its rolling mill business, held by Alcoa Warrick LLC to Kaiser Aluminum Corporation for total consideration of approximately USD 670 million, which includes USD 587 million in cash and the assumption of USD 83 million in other postretirement employee benefit liabilities. The sale is expected to close by the end of the first quarter of 2021, pending regulatory approval and customary closing conditions. The rolling mill is located at Warrick Operations, an integrated aluminum manufacturing site near Evansville, Indiana. Alcoa will retain ownership of the site’s 269,000 tonnes 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.
This announcement is part of Alcoa’s strategy to generate between USD 500 million and USD 1 billion in cash through the sale 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, Arkansas, and received USD 200 million in cash with an additional USD 50 million that will be paid if certain post-closing conditions are satisfied.
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 tonnes of flat rolled aluminum annually for use in packaging, including food containers, aluminum cans, and bottles.