NEW YORK, May 1 (Reuters) - Alcoa Inc
said on Friday it sold a second of four units it had been trying to unload this year so it can focus on its core business of aluminum production.
One day after announcing it was selling most of its electrical and electronic solutions division to private equity group Platinum Equity, the company said it has sold its Cast Auto Wheels business.
Spokesman Kevin Lowery said the business, based in Beloit, Wisconsin, had been sold, but he gave no further details.
On Thursday, Alcoa said it agreed to sell the wire harness and electrical distribution part of the electrical and electronic solutions unit. Financial terms were not disclosed and it is expected to be completed by the end of the second quarter.
Lowery said the company is in discussions with several parties interested in buying the remainder of the electrical and electronic division, as well as with potential buyers of the other two businesses it is selling.
In January, Alcoa said it intended to divest four downstream businesses: electrical and electronic systems, cast auto wheels, global foil and European transportation products. The businesses had 2008 combined revenues of $1.8 billion and an estimated after-tax operating loss of about $105 million.
Expected net proceeds for the divestitures were estimated to be approximately $100 million, Alcoa said.
But some analysts questioned the move at a time of an economic downturn, especially in the automotive industry, which uses plenty of aluminum.
Charles Bradford, of Bradford Research, questioned whether there were many buyers out there. "Their (Alcoa's) original comments were pretty optimistic," he said. "I imagine they will incur some losses on those sales -- $100 million is chump change."
He noted the current auto industry problems, such as Chrysler's bankruptcy filing, could hurt aluminum companies who supply the metal for vehicles and parts.
"With their GM (General Motors) exposure, $100 million could be gone really quick," said Bradford.
Another analyst who requested anonymity, said the wire harness business was competitive, "but with all the travails in the automotive industry, I can't believe it will fetch a lot of value."
Tony Robson of BMO Capital Markets in Toronto said it was difficult to assess the impact since no financial details were revealed. "(But) It is good to see Alcoa focus on its higher-margin, value-added production rather than its exposure to downstream businesses."
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