Equity groups aim to form £1bn European metals giant

Private equity groups CVC and Blackstone are looking at forging a new £1bn European metals giant. They want to merge the European based aluminium business of Corus, formerly British Steel, with the world's two largest aluminium rolling mills being sold off by Canadian metal group Alcan.

Private equity groups CVC and Blackstone are looking at forging a new £1bn European metals giant. They want to merge the European based aluminium business of Corus, formerly British Steel, with the world's two largest aluminium rolling mills being sold off by Canadian metal group Alcan.

Next month Alcan will kick off the formal sale process for the mill in France and its 50 per cent stake in the AluNorf mill in Germany. Analysts estimate that each asset would fetch over £500m. Alcan must sell one of the mills by the end of this year as a condition for its £2.6bn takeover of French aluminium business Pechiney last year.

Last week, Corus announced operating losses for 2003 of £208m. It needs to sell its aluminium business, worth around £450m, to help pay off debts of £1bn. Philippe Varin, chief executive of the Anglo-Dutch company, said it had begun discussions with potential buyers.

Last year, the Dutch works council, which can veto group board decisions, blocked the sale to Pechiney. It said it did not want the proceeds spent on propping up the loss making UK part of Corus. But the Dutch opposition appears to be weakening. The chairman of the Dutch works council, Frits van Wieringen, did not guarantee that a sale would be approved second time round, but hinted: "It is a good idea for Corus to look to the future. It's not correct to say anything public about it."

CVC and Blackstone have begun individual discussions with Corus about buying the aluminium business, but no bid has been tabled. Alcan said it could also be interested, as could the two Russian businessmen, Alisher Usmanov and Oleg Deripaska, who own about 14 per cent of the company.

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