Alcan Plans to Sell Stake in Utkal Alumina
By The Canadian Press
13 Apr 2007 at 06:00 AM GMT-04:00
MONTREAL (CP) -- Canadian metals giant Alcan Inc. [TSX:AL] says it plans to sell its 45% stake in India's Utkal Alumina International Ltd., a joint venture set up in 1992 to develop a new bauxite mine and alumina refinery in the Indian state of Orissa.
Alcan said it expects the sale to close in the second quarter, but did not say how much it expects to generate from the proposed transaction.
It also did not disclose the potential buyer.
The company said it is selling its stake because as a minority partner it feels limited in the key decisions on the project. Hindalco, part of Indian industrial giant Aditya Birla group, holds the controlling 55% interest in Utkal.
Earlier this year, Hindalco struck a $6 billion friendly takeover deal to acquire Alcan spinoff Novelis Inc. [TSX:NVL]
''We have carefully weighed the opportunity and risk presented by the Utkal project and, given constraints within the governance structure that limit Alcan's ability to participate in key decisions, believe that we have acted in the best interests of all our stakeholders.'' said Jacynthe Cote, president and CEO of the company's bauxite and alumina division.
''The company will keep a strong focus on growing and executing its pipeline of projects in bauxite-rich regions, which will leverage its world-leading alumina refining technology.''
The Utkal project, currently in an engineering phase, will continue to receive Alcan technology, the company said.
Bauxite is the key mineral used in aluminum production. It is mined from the earth then processed into alumina powder, which is used along with electricity and heat in the smelting process to produce light-weight aluminum metal.
Alcan employs 68,000 employees, including its joint-ventures, and operates in 61 countries and regions. The company had revenues of $23.6 billion in 2006.
Hindalco of Mumbai, plans to pay $44.93 a share cash for all of Novelis stock and assume $2.4 billion of debt in a friendly deal that would make Hindalco the largest rolled-aluminum products manufacturer in the world.
Hindalco is the flagship company of the Aditya Birla Group with interests in cement, metals, telecommunication and textiles.
In Thursday trading on the Toronto Stock Exchange, Alcan shares fell nine cents to close at C$61.85 on a volume of more than 736,000 shares.
