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. Last Updated: 07/27/2016

Alcoa Gets Green Light to Buy Two RusAl Plants

The Federal Anti-Monopoly Service approved Alcoa's plan to buy two aluminum plants from Russian Aluminum after the U.S. company, the world's largest producer of the lightweight metal, agreed to keep supplying Russia's aerospace industry.

Alcoa agreed in May to buy from Russian Aluminum, or RusAl, controlling stakes in the Samara and Belaya Kalitva rolling mills, which make aluminum tube and plate, for an undisclosed price. The companies had said the takeover would be complete by June 30.

The approval of the deal had been delayed amid what some defense sources said was reluctance on the part of officials to sell factories linked to sensitive military equipment to a foreign company.

The service said the sale of the plants came after a special mechanism was set up to use anti-monopoly rules to protect national interests.

"Given the fact the plants acquired by Alcoa have a dominant position in some spheres of aluminum production and are producing some military equipment, the buyer was ordered to guarantee steps to protect competitiveness and defend Russian state interests," the service said in a statement.

It also said Alcoa was obliged to sign documents regulating its labor policies as well as pricing agreements relating to long-term state military procurement deals.

"We believe the final working arrangements will protect both Alcoa's interests and those of the Russian government," Alcoa chief executive Alain Belda said in a statement.

Pittsburgh-based Alcoa has entered into a contract with state-owned procurement company Oboronpromkompleks, Russian law firm Yegorov, Puginsky, Afanasyev & Partners said in an e-mailed statement. The contract guarantees that Alcoa will supply Russia's aerospace industry, said the law firm, which advised the government.

Alcoa is expanding aluminum production outside the United States to cut power and labor costs. Its Russian operations include a plant that produces plastic lids for beverage cans.

Regulators in the United States and Europe already have approved the sale of the rolling mills to Alcoa. RusAl, controlled by Oleg Deripaska, produces about 70 percent of Russia's aluminum and exports 90 percent of its output.

Samara is Russia's largest producer and exporter of aluminum products with a capacity of 450,000 tons per year. It produced 173,868 tons of products in 2003.

RusAl increased output by 4.3 percent last year to 2.6 million tons. It said in April it might sell bonds and shares in 2006 to finance further production increases.

(Reuters, Bloomberg)