Kaiser Aluminum Navigates Legal Intricacies to Close a Transformational Deal

THE CHALLENGE:

Demand for aluminum packaging, such as cans and bottles, has grown in recent years in an ongoing trend toward sustainability. In addition to being light to transport and infinitely recyclable, aluminum makes a reliable, versatile packaging material for food, beverages and other products.

Longtime Firm client Kaiser Aluminum Corporation, a leading producer of specialty aluminum products for aerospace, automotive, general engineering and other industrial applications, recognized that re-entering the aluminum packaging market would create significant opportunity for the company’s long-term growth by enhancing and diversifying its product portfolio.

OUR OBJECTIVE:

To help the company achieve re-entry into the aluminum packaging space, Kaiser Aluminum turned to its long-term antitrust adviser Ray Jacobsen for an introduction to McDermott’s M&A team, including Tom Sauermilch and Meir Lewittes.*

The M&A team collaborated with company executives on a strategy for acquiring the Alcoa Warrick aluminum rolling mill—one of only four dedicated can sheet mills in North America—in a competitive auction process. Throughout the process, they also worked closely with Kaiser Aluminum’s metals investment banking team at Jefferies.

Warrick’s leading position in the North American aluminum packaging industry, with a facility including casting, hot and cold rolling capacity and a range of finishing and coating lines, made it a unique and attractive opportunity for Kaiser Aluminum.

THE OUTCOME:

Just four months after Kaiser Aluminum and Alcoa publicly announced the deal, Kaiser Aluminum’s McDermott team successfully communicated across practices and offices to navigate an enormous number of legal intricacies and close the deal. Kaiser Aluminum acquired the rolling mill in an equity deal for a purchase price of $670 million, bringing nearly 1,200 Warrick employees into its fold.

As a sizable addition to Kaiser Aluminum’s portfolio, the acquisition was transformational for the company.

The complex carve-out transaction not only separated the rolling mill from a power plant and smelter included in the overall industrial complex, it required the allocation of assets, liabilities, intellectual property rights and environmental responsibilities at the complex, the allocation and assumption of obligations under labor contracts, and mutual transition and other services to be provided at the complex by each party after closing—among numerous other considerations. Drawing on a depth and breadth of talent, the legal team included lawyers advising on capital markets, labor and employee benefits, energy, environmental, intellectual property, real estate and transition matters.

MAKE IT EASY:

The McDermott team’s long relationship with the client, intimate knowledge of the metals industry and deep experience in executing relevant high-value deals made them an ideal partner for Kaiser Aluminum. The company’s executives expressed great satisfaction with the legal team’s seamless multi-disciplinary process and their thorough understanding of Kaiser Aluminum’s preferred approach to the work, along with the end results.

“We were very fortunate to have the McDermott team represent us,” said Kaiser Aluminum Chief Administrative Officer and General Counsel John Donnan. “They were a cultural fit, outstanding throughout the process, and they continue to play instrumental roles as part of our integration teams. Every part of this transaction was complex and required a deal team of not only subject matter experts, but a team that knew how to navigate a complex process by listening, consistently striking the right tone, seamlessly coordinating internally across offices and areas of expertise, working well with our teams, engaging effectively with our board and advisors, coordinating efforts, facilitating alignment and helping us find solutions for complex issues. Tom, Meir and Ray were tremendous and were able to leverage their experience together to ensure that we always had the right resources working on the right things. Truly outstanding and well-deserved recognition [by the M&A Advisor Awards] of something we experienced first-hand.”

Around-the-clock attention and a pragmatic approach—listening closely to identify and prioritize Kaiser Aluminum’s business objectives, providing strategic guidance when needed and establishing a reliable rapport with Alcoa’s representation—also factored heavily in the legal team’s success.

The 2021 M&A Advisor Awards recognized the deal as M&A Deal of the Year ($500 million – $1 billion).

Learn more about our M&A capabilities.

*Kaiser Aluminum’s McDermott team was led by Tom Sauermilch and Meir Lewittes and included relationship partner Raymond Jacobsen, along with Joel Grosberg, Diane Morgenthaler, Kristin Michaels, Daphne Trotter, Jacob Hollinger, Elias Eliopoulos, Jason Krieser, Jed Gordon, Andrew Kratenstein, Tom Conaghan, Dan Zucker, Michael Siekman, Rob Lamkin, Nicole Yoon, Ana Koff, Jiaxiao Zhang, Rick Stepanovic, Marjorie Soto, Nickou Oskoui and Daniel McGuire.