Wells to get foreign owner

Aluminum company based in Towson sold to Hydro Norsk

January 25, 2000|By Mark Ribbing | Mark Ribbing,SUN STAFF

One of Europe's largest aluminum companies said yesterday that it has agreed to buy Wells Aluminum Corp. of Towson for an undisclosed sum.

Norsk Hydro ASA, based in Oslo, Norway, said it plans no job cuts for Wells, which has 30 employees at its headquarters and 1,700 nationwide.

"We're very excited. It will be a good move for Wells employees and Wells customers," said Wells spokesman Lynn Brown. "[Norsk Hydro] has a strong interest in investing in the U.S."

The sale would be Wells' second ownership change in little more than a decade. Founded in 1943, the company was bought by a New York investment firm in 1987. Five years after that purchase, Wells' headquarters was moved from Indiana to Maryland.

Wells, a privately held company, announced in August that it was seeking a buyer.

Wells put itself on the block because of financial necessity. While the company had net sales of $250 million and earnings of $8.8 million in 1998, the latest figures available, it carries $105 million in debt and faces a rapidly consolidating aluminum industry that demands ever-larger capital outlays.

"Scale is getting more important in this business, to deal with large customers," said Lloyd T. O'Carroll, an analyst with Scott & Stringfellow Inc. in Richmond, Va. "Large purchasers are making a deliberate attempt to trim the number of suppliers because it's so much cheaper to deal with a few large companies."

Wells has seven plants across the Midwest and South. All but two engage in Wells' bread-and-butter activity, a process known as extrusion.

Extrusion is the process by which aluminum is shaped into window sashes, car bumpers and other objects that require precise shaping. It is the second most common method of aluminum fabrication; the most common is flat rolling, the procedure by which aluminum cans and tinfoil are created.

O'Carroll likened the extrusion process to squeezing toothpaste from a tube. An aluminum chunk, known as an ingot, is melted and shaped into a cylinder. This cylinder of aluminum, called a billet, is mixed with other metals -- typically magnesium, manganese or copper -- to improve strength, flexibility and other properties. The resulting alloy is pressed and pushed through a steel die, which determines its shape.

Norsk Hydro is Europe's biggest aluminum extruder, and is second worldwide to industry megalith Alcoa Inc. The purchase of Wells, one of the largest independent extrusion companies in the United States, is intended to give Norsk Hydro a larger presence here. Norsk Hydro sells about 35,000 tons of extruded aluminum annually in North America; the addition of Wells' plants would raise that figure to 110,000 tons.

Ivar Hafsett, president of Norsk Hydro's extrusion division, said sales for Wells' operations could increase by 50 percent in the next five years because of improvements in efficiency and technology after the acquisition.

"We have a very strong position in technology, and this will be good for Wells," Hafsett said.

The two companies expect the deal, which faces regulatory review, to be completed within a month.

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