Rio Tinto has agreed to sell its Atlanta, Georgia-based wire and cable business Alcan Cable to NYSE-listed General Cable for $185-million, the companies said on Monday.
The diversified mining giant has been selling off non-core operations from the aluminium business it bought in 2007 for some $44-billion, announcing in October it was putting up 13 assets up for sale.
Alcan Cable has around 1 000 employees with factories and distribution facilities in the US, Canada, Mexico and China.
The Rio Tinto unit had low-single digit operating margins last year, General Cable said, adding that the business would contribute some $650-million to $700-million in yearly sales, using current metal prices.
Alcan Cables operating margin would meet that of its acquirer’s over a cycle, thanks to operating synergies, General Cable noted.
“With these synergies, an improving North American market and an accelerating greenfield operation in China, the transaction is expected to create shareholder value in the near term,” General Cable said.
Alcan Cable mainly sells its products to the utility and building sectors.
The deal is likely to close in the second-half of 2012, and the purchase price is subject toadjustments base on the target's working capital levels at that point.