UPDATE 1-US seeks sale of N.C. plant for Sapa's Indalex buy

WASHINGTON, July 30 (Reuters) - Sapa Holding AB must agree to sell one of two North Carolina plants making aluminum sheathing to go ahead with its buy of Indalex Holdings Finance Inc, the U.S. Justice Department said on Thursday.

Sapa, owned by Norway's Orkla ASA (ORK.OL), and Indalex, which is in bankruptcy proceedings, are the only two U.S. manufacturers of aluminum sheathing, which cable television companies use, the Justice Department said.

The deal is worth about $150 million, the U.S. Justice Department said.

The companies must divest Sapa's aluminum sheathing manufacturing plant or Indalex's aluminum sheathing facility in order to proceed with the deal. Both are in North Carolina.

"The original proposed transaction threatened to deprive consumers of the benefits of competition," said Christine Varney, who heads the department's Antitrust Division, in a statement.

"Without the divestiture required by the department, purchasers of aluminum sheathing in the United States likely would have faced higher prices and reduced quality and innovation," she said. (Reporting by Diane Bartz, editing by Gerald E. McCormick)