Apollo Management, a US buyout firm, has clinched a $1.5 billion (€1.1 billion) deal for the aluminium division previously owned by Anglo-Swiss mining group Xstrata.
Apollo will pay $1.5 billion in cash for the division, which Xstrata acquired as part of its C$41 billion (€28.5 billion) purchase of Falconbridge last year.
The mining group had considered using the division, formerly known as Noranda Aluminum, as a platform for further acquisitions in the sector, but following a strategic review, it has decided to sell the assets instead. It will use the proceeds to fund deals in other sectors.
“Our review concluded that these assets do not provide Xstrata with the necessary scale or upstream exposure to represent a suitable entry point from which to build a world-class aluminum business,” Xstrata chief executive Mick Davis said in a regulatory news statement.
Apollo partner Rick Press said the business was “an outstanding collection of assets, with excellent growth potential.” John Harris, a founding partner at the firm, added that the division would be “an excellent addition to Apollo’s
portfolio of basic materials and value-added processing businesses.”
Apollo is currently pursuing a £1 billion deal for UK estate agency Countrywide, and has also been linked with a possible bid for Sainsbury’s, the UK retailer that has just seen off one private equity consortium. Last month it also agreed a $3.1 billion deal for US retailer Claire’s Stores.