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Alcoa agrees to sell packaging, consumer businesses for $2.7B

Alcoa agrees to sell packaging, consumer businesses for $2.7B

Alcoa Inc. said it has agreed to sell its packaging and consumer businesses to the Rank Group Ltd. of New Zealand for $2.7 billion (euro1.9 billion).
Alcoa said in April that it was considering selling the businesses, which include its Closure Systems International, Flexible Packaging, Consumer Products, and Reynolds Food Packaging units.
The cash deal is expected to close in the first quarter of next year, Alcoa said Friday.
Alcoa's packaging and consumer businesses generated about $3.2 billion in revenue and $95 million in after-tax operating income in 2006, representing about 10 percent of Alcoa's revenue and 3 percent of its after-tax operating income.
Alcoa expects to use the proceeds from the sale for the company's core business, including new smelters like the one just completed in Iceland, said Alcoa spokesman Kevin Lowery.
The Alcoa businesses being sold employ about 10,000 workers in 22 countries.
The Rank Group is a private company that employs about 17,000 people worldwide through units including Carter Holt Harvey, SIG Holding and Evergreen Packaging. The acquisition gives them a significant foothold in North America.
Alcoa's Closure Systems makes plastic and aluminum packaging closures for food, drink and personal care products while its Flexible Packaging unit makes pouch and blister packaging, shrink labels and foil lids for drug, food and other uses.
The Consumer Products unit makes Reynolds Wrap and private label foil and food wraps, while the Reynolds Food Packaging unit makes foil, film and food containers for foodservice, supermarket, agricultural and other markets.
Alcoa will continue to operate its flat-rolled can sheet products for the packaging industry, however.
Just last month, Alcoa completed the sale of its automotive castings business to Compass Automotive Group LLC. Alcoa had considered selling off its electrical and electronics business, too, but will instead restructure that business, Lowery said.
Alcoa is based in Pittsburgh and has executive offices in New York. Its shares gained 96 cents, or 2.7 percent, to $36.35 (euro25.28) in trading Friday.