Norwegian aluminium producer Norsk Hydro ASA approached Polish recycler Alumetal S.A. with a tender offer to acquire 100 percent of the company’s shares last week.
This second offer comes a year after a previous offer was launched by Hydro for the same purpose. The prior offer expired while under review by the European Commission. Hydro says the European Commission is again reviewing the offer, and the body is expected to release a provisional decision in three weeks.
The purchase price for Alumetal’s shares works out to be around €267 million (US$294 million). Hydro expects the purchase to raise annual EBITDA by €63 million. The purchase pushes the firm that much closer to reaching its target of increasing recycling EBITDA by NOK500 million (US$46 million) by 2025 and another NOK500 million by 2027.
Executive Vice President Eivind Kallevik, Head of Hydro Aluminium Metal, said in a press release that the tender is in response to increased demand from clients.
“The acquisition of Alumetal would be a strong strategic fit towards delivering on Hydro’s recycling strategy. We see a growing demand for recycled low-carbon aluminum in Europe. Forward leaning customers are leading the way in decarbonizing materials used in the production of automotive, building and construction, and consumer durables.”
Should the transaction be given the go-ahead by the European Commission, Hydro’s post-consumer scrap (PCS) usage will rise by 150 thousand metric tons per year. The new level of PCS usage will exceed targets for 2025 set in 2020.
Kallevik says Alumetal will be a welcome addition to Hydro.
“We have been impressed by the development of Alumetal, and by the quality of production, modern assets, and of the competence of management and employees. We hope to bring Alumetal into the Hydro family, to develop an even broader range of low-carbon products for our customers.”
Hydro notes that the deal is subject to customary terms and conditions, including obtaining merger clearance and becoming in control of at least 50 percent of the total outstanding shares.