Rio Tinto agreed to the sale of a chunk of its Alcan Engineered Products business overnight, signing a definitive agreement with US-based Platinum Equity.
The company agreed to sell 56% of Alcan Engineered Products’ Cable Division.
Cable manufactures aluminium energy cable products for the North American utility and construction markets.
The business has seven production sites in the USA, Canada and China.
Rio Tinto Alcan will retain the outstanding 44% stake and will remain a key supplier of aluminium rod and molten aluminium to Cable’s plants, the company said.
According to Rio chief financial officer Guy Elliott, this is the first time the company has entered into an agreement with a private equity partner.
“We will be able to step back from day to day management of the business but retain an economic interest in its recovery as market conditions improve,” he said.
According to Platinum partner Brian Wall, the firm will provide Rio Tinto an opportunity to participate in the future recovery of the business without having to manage that recovery themselves.
“We will execute a carve-out and transition the business to a standalone entity,” he said.
The terms of the transaction are confidential, although both parties expect it to close in several weeks.