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04 December 2023

DIC to sell German aluminium group Almatis

Dubai International Capital controls 80% stake in Almatis. (Supplied)

By Reuters

Dubai International Capital (DIC) is launching the sale of German alumina products maker Almatis as the fund seeks to reduce its liabilities in the wake of a debt restructuring, three people familiar with the deal said.

DIC has mandated Barclays to explore the options of the possible divestment, the people said on Thursday. Almatis is around 80 percent owned by DIC with a stake also held by Blackstone unit GSO Capital Partners.

The company had earnings before interest, tax, depreciation and amortisation (EBITDA) of around $100 million in 2014, DIC Chief Executive David Smoot said last year, without giving an expected valuation for the firm.

Listed aluminium companies trade at an average of 6.8 times their expected EBITDA. Groups which like Almatis specialise in premium alumina products - such as Vesuvius, Albermarle and Imerys - trade at a slightly higher average multiple of 7.5.

If valued at a similar multiple, Almatis could bring in more than $750 million in a potential sale.

A person familiar with the deal said, however, that DIC was hoping for a substantially higher price tag.

DIC bought Almatis at the height of the buyout boom in 2007 for $1.2 billion from Rhone Capital and Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan. But its investment crumbled as demand for the company's products collapsed in the economic crisis and Almatis went into restructuring in 2010.

In a bid to reduce debt, DIC sold German packaging group Mauser for 1.2 billion euros to private equity firm Clayton Dubilier & Rice in 2014.

The process of grooming both Almatis, a unit carved out of Alcoa in 2004, and British engineering aerospace group Doncasters for a sale began last summer and deals with respective buyers are expected to be clinched within 18 months, Smoot had said at the time.

DIC, Almatis, Barclays and Blackstone declined to comment.

Almatis, an acronym for "Alumina Materials, Innovative Solutions", makes alumina for the refractory, ceramic and polishing industries and has 1,150 employees. It posted sales of $550 million in 2013.

Almatis sought protection from creditors with more than $1 billion in debt, which stemmed from the leveraged buyout by DIC. The group was able to restructure the liabilities later the same year in a deal that saw DIC invest $100 million in Almatis.