On July 30, 2009, the DOJ announced that it reached a settlement that will require Sapa Holding AB and Indalex Holdings Finance Inc. to divest a North Carolina aluminum sheathing facility in order to proceed with Sapa’s proposed $150 million acquisition of Indalex. According to the complaint, the transaction would substantially lessen competition for the manufacture and sale of aluminum sheathing (coiled extruded aluminum tubing) used in the manufacture of high frequency coaxial cable in the United States, resulting in increased prices and reduced quality, service and innovation, had the parties not agreed to the divestiture.
The companies must divest either Sapa’s Catawba, N.C. aluminum sheathing manufacturing plant or Indalex’s aluminum sheathing facility at its Burlington, N.C., plant in order to proceed with the deal.
According to the complaint, Sapa and Indalex are the only two manufacturers of aluminum sheathing in the United States. Indalex is currently involved in bankruptcy proceedings. Aluminum sheathing is used to make coaxial cables that are purchased by cable television companies in the United States and abroad for use in transmitting high frequency broadband signals to their subscribers. Aluminum sheathing is made to exacting specifications to provide protection for the components of the cables to prevent the loss of the transmission signal to subscribers.
Under the proposed settlement, in the event the companies are unable to sell either the Catawba, N.C. or Burlington, N.C. facility promptly to a viable purchaser acceptable to the DOJ, they must sell Indalex’s entire Burlington, N.C. extruded aluminum plant, which produces fabricated aluminum products, such as conduit and aluminum shapes, in addition to aluminum sheathing.