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UPDATE 1-Schweiter buys Rio unit for $349 mln, shares soar

Published 09/22/2009, 06:05 AM
Updated 09/22/2009, 06:09 AM
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* Sale is part of Rio's efforts to reduce debt

* Schweiter still looking at acquisition opportunities

* Schweiter shares soar 18 percent (Adds analyst comment, Schweiter shares, background)

SYDNEY/ZURICH, Sept 22 (Reuters) - Swiss machinery company Schweiter Technologies is to buy Rio Tinto's Alcan Composites business for $349 million, the groups said on Tuesday, lifting Schweiter's shares some 18 percent.

Global miner Rio and Schweiter said in separate announcements that they expected to complete the sale of the unit, which makes aluminium construction material used in wind farms, by the end of the year.

"The purchase price (is) not demanding," said Vontobel analyst Fabian Haecki.

"The acquisition should be EPS (earnings per share) accretive from 2010 on. Hence, this could well turn out to be a value-creating acquisition," he said.

By 0923 GMT, shares in Schweiter had risen 18 percent to 519.00 Swiss francs, its highest level since June 2001, easily outperforming a 1 percent rise in the Swiss Performance Index. Rio's shares in London gained some 3 percent to 2,717 pence, compared to a 2.4 percent increase in the UK mining index.

Schweiter said that it expected to have liquidity of around 300 million Swiss francs ($289.6 million) once the transaction was completed, and it was still pursuing other acquisition opportunities.

Rio's sale of the unit is another step in its divestment and debt-cutting strategy, which has now reached $7 billion in asset disposals -- nearly halfway to its $15 billion target set two years ago after it piled on debt with the purchase of Canada's Alcan at the top of the market.

Rio had net debt of $39.1 billion at the end of June, but cut it to $24.3 billion in early July with the proceeds of a rights issue.

Last week, Rio said it had sold a 56 percent stake in the cable division of its Alcan Engineered Products unit to U.S. investment firm Platinum Equity for an undisclosed sum.

Rio agreed in August to sell most of its remaining Alcan packaging businesses to Australia's Amcor for $2 billion. (Reporting by Mark Bendeich in Syndey, Katie Reid in Zurich and Eric Onstad in London; Editing by Michael Urquhart and Rupert Winchester)

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