If you look closely at Alcoa's
As last week ended, it was announced that Alcoa would take $2.7 billion from New Zealand's privately held Rank Group for its packaging and consumer businesses. The units involved in the cash transaction manufacture plastic and aluminum packaging for food and personal care items, along with turning out pouch and blister packaging, shrink labels, and foil lids.
Collectively, they employ about 10,000 workers in a couple of dozen countries, and generate after-tax income of about $95 million from about $3.2 billion in revenue. With closing expected next quarter, Alcoa will apply the proceeds to upgrades of its core businesses.
Last month, Alcoa completed the sale of its automotive castings business. That sale, along with the newly announced jettisoning of the packaging units, follows an effort earlier this year to acquire its Canadian aluminum manufacturer rival, Alcan. The target company ultimately spurned Alcoa's cash and stock overtures in favor of a much larger all-cash offer from London-based mining giant Rio Tinto
With the rapid industrialization of China, India, and some other developing nations, the metals and mining sector has been growing quickly in importance to those countries. At the same time, the sector is becoming a hotbed of takeover activity. In addition to the Alcan purchase, copper producers Freeport McMoRan
So, while I'm not predicting that Alcoa will become the object of a buyout offer -- or a suitor again -- during 2008, I believe that the company's trimming of non-core assets and the application of resulting funds toward core areas could render it more attractive, whether as the hunter or the prey.
On that basis alone, to say nothing of its nearly 2% dividend yield and its key position in a significant metals market, I'd urge Fools to find a prominent spot for it on their investment watch lists.
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