Norsk Hydro ASA, (NYSE: NHY) Norway’s largest public company, and the largest aluminum extrusion company in Europe, today announced that it has entered into an agreement to purchase Wells Aluminum Corporation, a major U.S. extrusion company based in Baltimore, Maryland. Wells is primarily owned by a partnership controlled by Gibbons, Goodwin, van Amerongen and the company's management. The acquisition will increase Hydro’s volume in the extrusion market by 75,000 tonnes, significantly expanding Hydro’s aluminum products to the U.S. based transportation, construction and other industries. In addition, this acquisition will increase Hydro's North American cast house capacity for producing extrusion billet used in the extrusion process.
The agreement was signed today in New York. Upon consummation of this acquisition and combined with its six established U.S. extrusion operations supplying to a solid customer base of the automotive industry, Hydro will become the fourth largest aluminum extrusion company in North America with a total sales of 110,000 tonnes. Aluminum extrusion companies utilize presses to push aluminum billets through dies to form a wide range of diverse aluminum shapes used for industrial and consumer products.
“This transaction augments our long-term strategy to leverage Hydro’s extensive competence and experience in providing light metal solutions, technology and research and offer these capabilities and expertise to our U.S. customers. Wells is a perfect fit for Hydro because of its reputation for high quality products, the location of its plants in the Midwest and Southeast , the diversity of its product lines and for the synergies we will be able to provide our customers,“ notes Ivar Hafsett, President of Hydro Aluminum Extrusion.“ This acquisition supports Norsk Hydro's strategy to
have a profitable position among the world's top three integrated light metals companies and Hydro Aluminum Extrusion's goal of meeting the growing demand for aluminum applications by the U.S. transportation, construction and other industries for light weight, flexible and recyclable metal.
Russell Kupiec, President and Chief Executive Officer of Wells, stated, "We are very pleased with the agreement with Norsk Hydro. They are a recognized leader in aluminum extrusion. Access to their technology, combined with our existing plant network and Norsk Hydro's commitment to growth in North America, will be very beneficial for the customers and employees of Wells."
The agreement to purchase Wells and Hydro’s further investment plans to leverage the synergies gained, follows a number of significant investments of Norsk Hydro's Light Metals divisions in the American market. These investments include the USD 33 million investment to build a first of its kind remelt plant in Kentucky, capable of producing primary quality aluminum from remelted scrap and its participation in the financing of the casthouse expansion of its tolling partner, Goldendale Aluminum Co. Hydro also recently signed an agreement with Aluvale, a major Brazilian aluminum company to purchase approx. one million tonnes of metal over ten years to supplement the Goldendale and remelt plant capacity and meet the growing demand of its U.S. customers for primary aluminum.
Another important recent Hydro investment is the upgrade of its bumper manufacturing facility in Michigan designed to meet the growing demand for its aluminum bumpers by the U.S. automotive industry.
In addition, last week, Norsk Hydro announced agreements in Brazil to expand its alumina base, by acquiring 25% of the shares of Alunorte an alumina refinery and to finalize the feasibility study to expand production by 50%. These agreements will ensure Hydro a steady supply of alumina, a material used for the production of aluminum.
Hydro Aluminum Extrusion is the world’s second largest extrusion manufacturer, and clear market leader in aluminum extrusions in Europe. It operates more than 60 businesses throughout Europe, Latin America and the United States and has joint ventures in Asia and Africa. Norsk Hydro sold 410,000 tonnes of aluminum extrusions in 1999. Four of Hydro Aluminum Extrusion's businesses based in the United States provide heat transfer products to the automotive industry, a business in which Hydro Aluminum Extrusion is the world market leader.
Wells Aluminum Corporation is a custom extruder, finisher and fabricator of soft alloy aluminum products, serving principally the building and construction, transportation and consumer durable, and equipment/electrical markets. Wells operates a network of seven facilities with 12 extrusion presses, located in six states in the midwestern and southeastern United States, and also has its own casting facility for aluminum billet. The common stock of Wells is privately held.
Norsk Hydro is one of the world's leading energy and industrial companies. Founded in 1905, Hydro has a presence in more than 100 countries and approximately 40,000 employees. Its core businesses are oil and energy, light metals and agriculture. Hydro is one of 18 companies, world wide, that are included in the Dow Jones sustainability group index. Its world wide headquarters are located in Oslo, Norway. Norsk Hydro Americas is based in Tampa, Florida, and the headquarters of Hydro Aluminum Extrusion are located in Lausanne, Switzerland.
The acquisition of Wells by Norsk Hydro is subject to expiration of the Hart-Scott-Rodino review period and other customary conditions.
Hydro Aluminum Extrusion was advised by Warburg Dillon Read while ING Barings LLC advised Wells Aluminum and Gibbons, Goodwin, van Amerongen.
Except for historical information contained herein, the matters discussed in this press release consist of forward-looking information under the Private Securities Litigation Reform Act of 1995, the accuracy of which is necessarily subject to and involves risks and uncertainties that could cause actual results to differ materially from the forward-looking information. Statements regarding the consummation of the transaction are subject to risks that the closing conditions to the transaction will not be satisfied, including the risk that regulatory approvals will not be obtained. In addition, statements regarding the expected benefits of the transaction are subject to the general risks associated with the companies’ businesses. For risks about Hydro’s business see its Form 20-F for the year-ended December 31, 1998 and subsequent Forms 6-K.