How about this for a window industry related acquisition? Last week, Norsk Hydro, an aluminium producer in Norway, bought a 50% stake in Sapa which gave them overall control of the company. The deal was a cash purchase, for a cool $3.2bn, which makes Norsk Hydro the second largest company in Norway. It also makes Orkla, the previous owners of that 50% stake a few billion dollars richer.

This is the official press release from Sapa announcing the deal:

Norsk Hydro has agreed with Orkla to acquire its 50 percent interest in Sapa for a total enterprise value of NOK 27 billion, giving full ownership in the global leader in extruded aluminium solutions and making Hydro a leading force in the global aluminium industry.

Transactional highlights:

  • Binding agreement to acquire Orkla’s 50% interest in Sapa
  • Sapa enterprise value NOK 27 billion
  • Accretive to earnings and strong cash generation from Sapa from day 1
  • Synergies of NOK 200 million per year, mainly related to remelt and recycling
  • Sapa to become new business area in Hydro, named Extruded Solutions
  • Anticipated closing of the transaction in second half 2017
  • Strong strategic rationale
    • Global leadership: worldwide production and customer offering, with unparalleled technological capability
    • Growth: capability and freedom to grow in the most attractive areas of global aluminium
    • Infinite solutions: responsible operations and sustainable solutions for the future low-carbon economy


The transaction will be financed through cash positions and issuance of bonds in Norwegian and international markets, and will be temporarily funded by committed undrawn credit lines. Following the transaction, Hydro is committed to retain its investment grade rating and a robust balance sheet. Hydro will maintain its dividend policy of returning 40 percent of net income over the cycle, with NOK 1.25 per share seen as a floor in 2017.

The purchase price will be paid in cash at completion, adjusted for net debt and normalized working capital.

Completion of the transaction is subject to approval from relevant competition authorities, and is expected in the second half of 2017.

Union representatives from both companies have been involved in the acquisition process from the very start, making sure the voices of their members are heard.
Completion of the transaction is expected by second half 2017, pending approvals from relevant competition authorities in Brazil, Canada, China, EU and Turkey.

See the original article here

As you can see from the release, this is quite a big deal. Then again, Sapa is quite a big company.

DGB Business

More than just windows and doors

To many reading this, Sapa will be known by their aluminium window and door products, which is one of their key markets here in the UK. But, Sapa do far more than just window and door products.

If it’s made of aluminium, Sapa are there. They are active in the construction, automotive, energy, transportation, industrial design and general infrastructure markets around the world. Lamp posts, wheelchair ramps, bridges, remelting, windows and doors, cruise ships and everything in between. Sapa has aluminium in all sorts of places all around the world. Hydro’s 50% stake valued Sapa at $3.2bn. So you can appreciate what 100% of the company is worth and how significant this purchase is.

That being said, most reading this will only concern themselves with the window and door part of Sapa. In the transactional highlights part of the press release, it mentions that Hydro will rename Sapa as Extruded Solutions and will be responsible for new business within the Hydro group. This is a clear hint then that the Sapa name will fall by the wayside in the future. To those loyal to the Sapa brand and product I’m not sure how well this will go down. For those of us who sell Sapa aluminium windows and doors in both the residential and commercial markets, will that mean the products have to be advertised under the name Extruded Solutions? I hope not. That would be an awful path to go down. Hopefully Sapa will be able to trade with some level of marketing freedom here in the UK and installers will still be able to sell and install those products under the existing name.

The deal still has to be cleared by a number of competition authorities in a number of countries around the world. However, there doesn’t appear to be any signs of problems so far, so I expect the deal to go through and for Norsk Hydro to acquire and very valuable asset.

As far as the acquisition trend goes in the window and door sector here, we can treat this one as a stand alone deal. Unlike domestic purchases here where we are seeing the formation of super-groups and those groups gaining instant access to new areas of the market, this is very much a global deal. A global deal which sees it’s effects ripple here in the UK, only because this is one of a number of countries Sapa operates in. The motives for this purchase will differ to that of our domestic industry deals.

Moving forwards on the domestic windows and doors front, I fully expect more acquisitions to be made in our industry in the coming months. There is still some more consolidation to go in our industry, and there could be one or two whoppers thrown into the mix as we head towards the end of the year.

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