Alcoa today announced it has completed the acquisition from RUSAL of two fabricating facilities in Samara and Belaya Kalitva in the Russian Federation for $257 million in cash.
"These plants have unique capabilities, a wide product breadth and a very capable workforce," said Alain Belda, Alcoa Chairman and CEO. "Acquiring these assets supports our growth plans in the commercial transportation, aerospace, automotive and packaging markets.
"We plan to integrate these facilities and invest in them so that we can be in an even better position to serve customers not only in Russia, but throughout Europe, Asia and the Americas as well," added Belda. "Over time, as these facilities are integrated into our system, we expect they will contribute to substantial advantages for our customers and competitive advantages for Alcoa."
In 2005 Alcoa plans to invest more than $80 million in capital and technology in the two facilities as well as investing in environmental, health, safety and Alcoa Business System (ABS) training to build consistency across these plants and others within the Alcoa system. The investments also will strengthen the ability of the plants to compete in the world market. These capital spending figures are included in Alcoa's previously announced 2005 capital spending plan of approximately $2.5 billion, of which $1.6 billion is dedicated to growth projects.
As a result of the acquisition and integration, Alcoa expects 2005 earnings from these assets to be an after-tax loss of approximately $40 million as they are put in a position to compete globally.
"We have a proven track record of taking fabricating assets -- such as those in Hungary, Spain and Italy -- integrating them into Alcoa, and putting them in a strong position to compete globally and grow profitably," said Belda. "These countries have provided additional growth opportunities to Alcoa once we began operating in them and we look forward to the chance to grow further in Russia."
The two facilities will join Alcoa's flat rolled products manufacturing system with operations in the U.S., Europe, Australia, China, and Brazil; the company's extrusion facilities in the U.S., Europe, Brazil, and Korea; and its wheels and forged products system with facilities in the U.S., Mexico, Japan and Europe. The integration will be led by Ric Belda, Alcoa Executive Vice President -- Europe, who has successfully integrated all the major acquisitions made by the company in Europe over the past several years. Ric will be assisted by Phil Collins, Country Manager -- Russia, who has managed similar assets in Hungary.
The Samara facility is located about 500 miles southeast of Moscow. It features cast house, flat rolled products, extrusion, and forging capabilities and serves customers in many markets, including transportation, packaging, and industrial products. The plant's production and quality control systems have been ISO 9001/9002 certified and is preparing for the ISO 14001 certification in Ecological Management.
The Belaya Kalitva facility is located about 500 miles south of Moscow. The facility also features cast house, flat rolled products, extrusions, tubes, and forgings capabilities. The Belaya Kalitva facility has specialized plate rolling and finishing equipment that will complement and increase Alcoa's present supply position. With Alcoa know how and management systems, the plant will not only be able to expand the product offerings for Russian customers but also will eventually be able to produce products for major customers in the west. The plant is ISO 9001 certified and is preparing for the ISO 14001 certification in Ecological Management.
The parties also entered into long-term arrangements for the supply of metal to the two plants. Separately the parties also entered into a long-term alumina supply arrangement.
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