According to a press release issued by Granges on August 17, the U.S. Bankruptcy Court has recently approved Granges’ acquisition of the downstream aluminum rolling business of Noranda Aluminum Holdings (NORANDA) in the United States. After the completion of the transaction, Granges will double its sales volume and strengthen its position in North America. At the same time, it will bring Granges a series of strategic aluminum rolling market segment opportunities. This merger has strengthened Granges’ North American business and is expected to have more growth opportunities in the future. The transaction is expected to complete on August 22, 2016.
- l The business and assets acquired by Granges are SEK 2.8 billion, and the corresponding EV/EBITDA multiple is 6.2 times (refer to the adjusted EBITDA in 2015)
- 2 The stable and profitable downstream operation of Noranda will strengthen Grängis’ existing business
- 3 Integrated industrial chain production, close to North American customers
- 4 Modern and cost-effective aluminum processing plant, no need to increase investment in the short term
- 5 Approved to supply customers in the attractive air-conditioning field
- 6 The expected transaction will increase the company’s earnings per share
- 7 Net debt in 2018 is expected to reach 1-2 times the financial target EBITDA Regarding the acquired business
According to the announcement, Noranda’s downstream aluminum rolling business mainly produces aluminum products for North American customers, including household air conditioners, transformers, food packaging, automotive heat transfer and other adjacent market segments. The company is the main supplier of these products in North America, occupying the market’s number one position in household air conditioner aluminum foil and capacitor aluminum foil.
Nolanda currently has three factories, the main production plant is located in Tennessee in the southeastern part of the United States, and it is also one of the most modern and efficient bases in North America. Noranda’s total aluminum rolling production capacity is 180,000 tons and the total number of employees is 550. In 2015, sales were 551 million U.S. dollars and sales volume was 172,000 tons. Granges paid US$324.2 million for the acquired business and assets.
Before the acquisition, Granges’ sales revenue composition was 46%, 38%, and 16% in Asia. Noranda’s business is all in North America. Therefore, after the acquisition, Granges will truly become a global supplier. Granges will have 5 factories around the world, and the total rolled aluminum production capacity will reach 400,000 tons. According to the output in 2015, the total of the two companies reached 336,000 tons, with sales of 1.203 billion U.S. dollars.