By Rachel Abbey McCafferty
Beachwood-based Aleris International Inc. announced it will sell its North American and European Recycling and Specification Alloys businesses to an affiliate of Signature Group Holdings Inc. for more than half a billion dollars.
The decision comes after a strategic review announced in April and will allow Aleris to further invest in areas of growth.
Aleris said in a news release on Friday, Oct. 17, that Signature would pay a total of $525 million for the businesses.
That’s made up of $465 million in cash, plus cash and preferred shares of Signature Group Holdings, according to Aleris. Signature defined it as $495 million in cash and $30 million in preferred Signature stock. The agreement is subject to post-closing adjustments and is expected to close “in the coming months,” though the companies were not more specific on the timeframe.
The planned sale includes 18 North American production facilities and six European locations providing “metal recycling services and specification alloy products,” the release said. According to a company spokesperson, that includes sites in Elyria and Rock Creek in Ashtabula County and a subsidiary in Macedonia.
“The sale of the recycling and specification alloys businesses will result in a stronger, more focused Aleris that will have greater flexibility to concentrate resources in the areas with the highest growth potential,” Aleris chairman and CEO Steve Demetriou said in the release.
“We have made a number of significant investments in our rolled products business over the past few years to serve the automotive, aerospace, and building and construction industries, and remain committed to strengthening our position in these key markets,” he said.
Sherman Oaks, Calif.-based Signature called the businesses the “global market leader in aluminum recycling” and highlighted the projected growth of recycled aluminum consumption in its own news release.
Signature’s chairman and CEO, Craig Bouchard, said in the release that the businesses have “strong growth prospects and a sustainable competitive advantage.” This marks the company’s entry into the “resurgent” North American and European aluminum market, according to the release.
The company expects to name Terry Hogan president of the business, effective upon the acquisition’s closing. Hogan is currently the senior vice president and leader of Aleris’ North American Recycling and Specification Alloys business. Russell Barr, the current vice president and leader of Aleris’ European recycling business, is expected to become the executive vice president, Europe.
The businesses being acquired represent about 30% of total revenues for Aleris at $1.5 billion, Signature said in its release.