Aluminum Firm CasTech to Be Bought by Rival

Commonwealth Aluminum Corp. said Monday that it has agreed to acquire CasTech Aluminum Group Inc., a rival maker of aluminum sheet, for a cash tender offer valued at about $265.3 million.

The acquisition would create one of the largest U.S. aluminum rolling operations, with annual aluminum sheet production capacity of more than 900 million pounds and combined revenue of $1.07 billion, Commonwealth said.

Long Beach-based CasTech is the nation’s leading manufacturer of continuous cast aluminum sheet. It had sales of $418 million in 1995 and has 825 employees.

Shares of CasTech, which also manufactures electrical wiring products, rose $5.375, or 36%, to $20.25 in New York Stock Exchange trading of 3.13 million shares, about 60 times the stock’s three-month daily average. Louisville, Ky.-based Commonwealth shares rose $1.375 to $15.875 on Nasdaq.

Commonwealth said the tender offer of $20.50 for each of CasTech’s 12.94 million outstanding shares will begin next week.

Analysts said CasTech’s efficient and lower-cost mini-mill technology will pare Commonwealth’s aluminum production costs and expand production, as its electrical wiring products cushion against cyclical swings of aluminum sheet prices and demand.

“The upside could be huge eventually,” said Peter Tuz, an analyst with Morgan Keegan & Co.

Commonwealth and CasTech both make aluminum sheet from scrap for use in the transportation, construction and consumer durables markets.