October 3, 2014 / 9:16 AM / 5 years ago

UPDATE 1-Constellium to buy Wise Metals in U.S. auto push

* Constellium to acquire Wise for $1.4 bln with debt

* Deal to support its expansion in automotive aluminium (Adds detail, background)

PARIS, Oct 3 (Reuters) - Aluminium products maker Constellium NV said on Friday it is to acquire U.S. peer Wise Metals for $1.4 billion, including debt, in a deal aimed at tapping into fast-growing demand from car makers for aluminium sheet.

Constellium had announced earlier this year its entry into the automotive sheet market in the United States, pitching itself against larger rivals Alcoa Inc and Novelis Inc in a race to be suppliers for a new generation of light-weight vehicles.

Wise Metals, a major supplier of aluminium for beverage cans, is not currently in the automotive sheet segment and Constellium said it plans to develop 200,000 tonnes of finishing capacity for body-in-white (BiW), or car body, sheet at the U.S. firm.

Constellium plans to invest $750 million by 2022 to create the new auto capacity and bring Wise’s total hot mill capacity to over 700,000 tonnes from 450,000 tonnes currently, it said.

“Constellium estimates that the North American market for BiW aluminum rolled products could grow from less than 100k tonnes in 2012 to approximately 2,000k tonnes by 2025,” the company said in a statement.

“This transaction is strategically aligned with Constellium’s objective of continuing to grow in this high value-added market, as evidenced by its leadership position in the European automotive market as well as its recent investments in BiW capacity in the U.S. and Europe.”

Constellium, whose roots lie in former French aluminium group Pechiney, unveiled in January a joint venture with Japan’s UACJ Corp to build an automotive sheet plant in the United States. In the same month, it said it would invest 200 million euros in Europe to raise capacity for car body sheet from 40,000 to 100,000 tonnes.

The group, which is listed on the New York stock exchange, said the acquisition of privately owned Wise Metals would comprise $455 million in cash and $945 million in the assumption of Wise’s existing debt.

The acquisition cost would be funded by a mix of debt and equity, with Deutsche Bank providing a fully committed bridge facility to finance the deal, it said.

The deal is expected to be quickly accretive to earnings and Wise’s earnings before interest, tax, depreciation and amortization (EBITDA) are expected to quadruple compared with 2013 once capacity investments are completed, it added.

Reporting by Gus Trompiz; Editing by Leila Abboud

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