The Dutch company Constellium N.V. has signed a definitive agreement to acquire Wise Metals Intermediate Holdings LLC, a private aluminum sheet producer headquartered in Muscle Shoals, Alabama. Under terms of the transaction, Constellium will purchase Wise for $1.4 billion, consisting of $455 million in cash and $945 million in the assumption of Wise’s existing debt. The transaction was unanimously approved by Constellium’s board of directors.
Wise’s business includes Wise Alloys, which produces aluminum can stock; Wise Recycling, a direct-from-the-public collection center for used beverage cans (UBC); Listerhill Total Maintenance Center, which provides maintenance, repairs and fabrication to manufacturers; and Alabama Electric Motor Services, which provides equipment and services to industries, municipalities, utilities and other commercial establishments.
Constellium reports that the acquisition of Wise, which has the widest hot strip mill in North America, will provide the Dutch company with immediate access to 450,000 metric tons of hot mill capacity. Following the acquisition, Constellium says it intends to invest up to $750 million by 2022 to increase Wise’s current aluminum hot mill capacity to more than 700,000 metric tons and build 200,000 metric tons of dedicated Body-in-White (BiW) finishing capacity to serve the automotive market. The investment in the new capacity is expected to be funded by operating cash flow generated by Wise and existing Constellium’s resources.
Constellium estimates that the North American market for BiW aluminum rolled products could grow from less than 100,000 in 2012 to about 2.2 million metric tons by 2025.
“The acquisition of Wise is transformative in many ways for Constellium,” says Pierre Vareille, Constellium CEO. “Wise is a natural fit with our business portfolio. The combination of their strong operating capabilities with our major position in the BiW and can sheet markets in Europe will create an outstanding platform to serve our customers. With three core businesses—aerospace, automotive and packaging—and a more balanced international dimension, Constellium expects to increase its earnings power and create sustainable value for customers and shareholders.”
David D’Addario, chairman and CEO of Wise Metals, says, "I'm extremely proud of what we built at Wise over the last 15 years. Our people, machinery and culture are world-class. I'm excited that we have a new steward for Wise who shares our views and has the technological and financial ability to take Wise to the next level. I will be watching with excitement as Wise continues to evolve in a profound way into the future."
Constellium notes that the transaction strengthens its global footprint and offerings by increasing the company’s exposure to the North American market. Wise’s U.S. can sheet business will supplement Constellium’s position in Europe and provide stability through long-term contracts with its global beverage can customers. Post-acquisition, Constellium expects to benefit from increased product development resources, improved competitive position, enhanced global reach and greater operational flexibility.
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