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Alcoa To Sell Rolling Mill Business To Kaiser Aluminum For About $670 Mln

Alcoa Corp. (AA) agreed to sell its rolling mill business, held by Alcoa Warrick LLC, to Kaiser Aluminum Corp. for total consideration of about $670 million. The sale price includes $587 million in cash and the assumption of $83 million in other postretirement employee benefit liabilities.

The announcement is part of the company's strategy to generate between $500 million and $1 billion in cash through the sale of non-core assets.

The company expects to close the sale by the end of the first quarter of 2021.

The rolling mill is located at Warrick Operations, an integrated aluminum manufacturing site near Evansville, Indiana.

Alcoa said it will retain ownership of the site's 269,000 metric ton per year aluminum smelter and its electric generating units. Alcoa will also enter into a ground lease agreement with Kaiser for property that Alcoa will continue to own at the Warrick site.

As part of the deal, Alcoa will enter into a market-based metal supply agreement with Kaiser Aluminum at closing. Alcoa will continue to operate the smelter and the power plant, which together employ about 660 people.

About 1,170 employees at the rolling operations will become employees of Kaiser Aluminum once the transaction is complete. The rolling operations includes the casthouse, hot mill, cold mills, and coating and slitting lines.

The rolling mill produces about 310,000 metric tons of flat rolled aluminum annually for use in packaging, including food containers, aluminum cans, and bottles.

After closing, Alcoa expects annual approximate decreases in sales of $800 million, net income of $45 million to $55 million. Alcoa expects to spend about $100 million for site separation and transaction costs, with about half being spent in 2021 and the remainder in 2022 and 2023.

Earlier this year, Alcoa had agreed to sell its former waste treatment business in Gum Springs, Arkansas, and received $200 million in cash with an additional $50 million that will be paid if certain post-closing conditions are satisfied.

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