Constellium moves to new ground with acquisition of Wise Metals


Oct. 10 2014, Updated 1:00 p.m. ET

Constellium acquires Wise Metals Group

Constellium N.V. (CSTM) announced its acquisition of Wise Metals Group (or Wise Metals) for $1.4 billion. This is a significant acquisition for Constellium. The company’s market capitalization is a little below $ 2.5 billion. Analysts expect the acquisition will help Constellium increase its presence in the U.S. markets.

Before we look at the dynamics of this deal and its strategic implications for Constellium, let’s look briefly at Wise Metals.

Your guide to Wise Metals

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Wise Metals is the world’s third leading producer of aluminum cans. As we saw previously, these cans are mainly used by food and beverage industries (see Part 7). Wise Metals is a privately held company based in Muscle Shoals, Alabama. It employs about 1, 250 people at its plant there. The company is renowned for excellent product quality and customer service. Wise Metals acts as a holding company. Its subsidiaries include the following:

  • Wise Alloys – the world’s third biggest producer of aluminum cans for beverage and food industries
  • Wise Recycling – one of the largest, direct-from-public collectors of aluminum beverage cans in the U.S.
  • Listerhill Total Maintenance Center – it specializes in providing maintenance, repairs, and fabrication to manufacturing plants worldwide
  • Alabama Electric Motor Services – in business for 35 years, it provides equipment and services to industries, municipalities, utilities, and commercial establishments

Before the acquisition of Wise Metals, Constellium was basically a European fabricator. With this acquisition, it becomes an international company. It also moves into upstream aluminum operations, through the aluminum recycling facilities of Wise Metals. Put together, Constellium is better positioned to compete with other aluminum companies such as Alcoa Inc (AA), Century Aluminum Co (CENX), and Kaiser Aluminum Corp. (KALU). Some of these companies are included in the SPDR S&P Metals and Mining ETF (XME).

Next, we’ll look at this deal’s strategic implications.


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