Foothill Ranch-based Kaiser Aluminum Corp., a year out of bankruptcy, could be back in the market.
“We’re in a good financial position to grow by investing back in the company and through acquisition,” Chief Executive Jack Hockema said.
Kaiser, which shapes aluminum into custom pieces for the aerospace, defense and auto industries, can take on more debt and is ready to issue shares to finance a deal, according to Hockema.
The company is interested in complementary businesses and isn’t looking at anyone in particular, he said.
Talk of consolidation in the aluminum industry has been running hot, especially with heavyweights Alcoa Inc. and Alcan Inc. surrounded with speculation about a combination, or even that either could be bought by other players.
Kaiser is seen as a possible buyer of Montreal-based Alcan’s aerospace division. Pittsburgh-based Alcoa is seeking to buy Alcan for $29 billion and could have to sell the aerospace unit to appease European regulators.
Alcan has rebuffed Alcoa so far. Last week, Alcoa said it could up its offer.
Buying Alcan’s aerospace division would be seen as a good move for Kaiser. The division makes aluminum products for Boeing Co., Europe’s Airbus SAS and Montreal’s Bombardier Inc.
Alcan’s aerospace unit had a record year in 2006 with revenue of about $1.6 billion, up 11% from a year ago.
Kaiser has yearly sales of about $1.3 billion and a recent market value of $1.6 billion. About 40% of Kaiser’s business is in aerospace and defense. It has contracts with Boeing, Airbus and Lockheed Martin Corp.
“The markets are strong for aerospace and defense,” Hockema said.
But a deal is between Alcoa and Alcan is far from certain. And there are other players in the mix.
London-based Rio Tinto PLC, the world’s No. 2 aluminum company, has shown interest in acquiring both Alcoa and Alcan. Also, BHP Billiton Ltd. of Australia has bid for Alcoa, and potentially could bid for Alcan.
For now, Kaiser is continuing with its turnaround.
The company emerged from bankruptcy reorganization a year ago. The company filed in 2002 amid an industry downturn and litigation over asbestos.
Kaiser last week said it plans to start paying shareholders dividends again. The company plans to payout about $3.7 million to shareholders next month for those who own the stock as of July 27.
Maxxam Inc., a Houston-based company in the forest product, real estate development and horse racing business, owns about two-thirds of Kaiser’s shares.
And Kaiser is following through on a $140 million plan to upgrade its plants. The company recently said it is spending $34 million to expand its plant near Spokane, Wash., due to increased demand for its products.
Investments stand to go into Kaiser’s extrusion business, which involves making single part products like doorframes, car parts and machinery, Hockema said.
Kaiser’s stock is off its recent high in May but still is up more than 75% from a year ago. The shares fell after first-quarter earnings came out in May and profits were less than expected due to higher costs that offset a big surge in sales.
Last week, Kaiser’s shares were added to the Russell 2000 index.
CORRECTION: (July 16)
The above story on Foothill Ranch-based Kaiser Aluminum Corp. should have said Houston-based Maxxam Inc. no longer is an investor in the company.
