Norsk Hydro Grows through Acquisition

Norsk Hydro ASA is buying Germany's VAW Aluminum for $1.68 billion in a deal that would make Norsk Hydro the largest aluminum producer in Europe.

The deal would create an aluminum concern with 30,000 employees and annual sales of nearly $9 billion.

The Norwegian concern said it also plans to eventually sell off VAX's flexible packaging division, which has about 4,800 employees.

``This acquisition is an important step towards realizing one of Hydro's key strategic ambitions: becoming one of the top performing world class aluminum companies,'' Norsk Hydro's chief executive Eivind Reitan said.

The sale requires approval from the European Union's competition authorities and by Norsk Hydro's corporate assembly.

Norsk Hydro and VAW's parent company, the German energy concern E.On, have been negotiating the deal since November.

In addition to the $1.68 billion in cash that Norsk Hydro is paying for VAW, Norsk will assume debt of about $672 million and unfunded pension liabilities amounting to about $403 million.

Norsk Hydro ASA also announced that it has formed a North American aluminum unit to support U.S. growth.

The Norwegian energy and industrial concern said Hydro Aluminum North America's core activities will be trading, commercial services and recycling, as well as metal products and extrusion.

Norsk Hydro expects the unit to employ more than 3,000 workers, including about 1,500 from Germany's VAW Aluminum AG.

Norsk Hydro employs about 38,000 worldwide.