The world headquarters of Alcoa Inc. is seen along the north shore of the Allegheny River in Pittsburgh, in this May 7, 2007 file photo. - AP

Alcoa Inc. said on Friday it agreed to sell its packaging and consumer businesses to New Zealand's Rank Group Limited for US$2.7 billion in cash, the latest move by the world's third-largest aluminum producer to focus on its core business.

Also said its packaging and consumer businesses accounted for about 10 per cent of its 2006 revenue and about three per cent of its after-tax operating income.

The assets to be sold have about 10,000 employees in 22 countries and include Reynolds aluminum wrap, among other consumer brand names, the New York-based company said.

Over the last several months, the company has been divesting what it has deemed underperforming assets that did not fit with the company's long-term corporate view for boosting profits, an Alcoa spokesman said on Friday.

The company will retain its flat-rolled can sheet products business - out of which soda cans are made - that serves the packaging market.

Investment bank Lehman Brothers served as financial advisor on the transaction, according to Alcoa, which said in October it had identified buyers for the packaging and consumer businesses.

Products

The assets that Alcoa is disposing of include Closure Systems International, a maker of plastic and aluminum packaging closures and capping equipment for beverage, food and personal care customers.

It also is selling its Reynolds Wrap branded and private label foil, wraps and bags business, and its Flexible Packaging unit. That unit makes laminated, printed and nonrigid packaging materials such as pouch, blister packaging, and shrink labels and foil lidding for the pharmaceutical, food and beverage, tobacco and industrial markets.

Alcoa in September sold its stake in Aluminum Corp of China Limited for US$2 billion, notching a US$1.8 billion gain on an investment.

Alcoa is also restructuring its automotive electronic and electrical businesses, an Alcoa spokes-man said.

The transaction announced late on Friday is expected to be completed by the end of the first quarter of 2008.

Production focus

Alcoa, which has been a rumoured takeover target amid a wave of consolidation in the global mining industry, has said the divestitures would help it focus better on mining bauxite and producing alumina which, in turn, is manufactured into aluminum.

Privately held Rank Group has large packaging operations, including Carter Holt Harvey, SIG Holding, and Evergreen Packaging, and employs about 17,000 people.

- Reuters