Atlanta-based Novelis Inc. says it has closed on its acquisition of Ohio-based rolled and secondary aluminum producer Aleris. Regulators in the European Union gave the green light in early April 2020 to an acquisition that was originally announced in July 2018.
Aleris operations are likely to now be merged into those of Novelis, which itself is part India-based Hindalco Industries Ltd. Hindalco, in turn, is part of the Mumbai-based conglomerate the Aditya Birla Group.
“The Aleris deal marks a major milestone for Novelis on its path to global leadership,” states Kumar Mangalam Birla, chair of Aditya Birla Group and Novelis. “The closure of this deal amidst challenging market conditions reflects our conviction in the Aleris business and its value to our metals portfolio.”
Continues Birla, “This is a long-term strategic bet, much like Novelis was in 2007. The Aleris deal crucially enables the further diversification of our metals portfolio into other premium market segments, most notably aerospace. At the same time, with this further expansion in our aluminum portfolio, we have taken a decisive step towards a more sustainable future.”
“Today is a transformational moment in our company’s history, and I’ve never been more confident in our ability to deliver even more value to our customers, colleagues and the communities where we live and work,” remarks Steve Fisher, president and CEO of Novelis.
With the addition of Aleris’ operational assets and workforce, Novelis says it is poised “to more efficiently serve the growing Asia market by integrating complementary assets in the region, including recycling, casting, rolling and finishing capabilities. The company will also add aerospace to its portfolio and enhance its ability to continue to bring innovative products to market, by strengthening its research and development capabilities and deliver on its purpose of shaping a sustainable world together.
“This acquisition strengthens Novelis’ leadership position in the aluminum industry and clearly defines Hindalco Industries as the preeminent company in the global metals sector,” says Satish Pai, managing director of Hindalco Industries and a director of Novelis.
Novelis will acquire Aleris’ 13 plants. Most plants are in North America, along with an aluminum rolling mill in Jiangsu province in China and an aluminum casting facility in Germany. To satisfy regulatory conditions, Novelis has been required to divest itself of the Aleris plants in Lewisport, Kentucky, in the United States, and in Duffel, Belgium.
The Belgium facility is tentatively headed to the Alvance aluminum production business unit of Liberty House Group, which is a part of the London-based GFG Alliance. There is not yet a reported buyer for the Lewisport aluminum auto sheet mill, which was temporarily idled March 30 because of declining North American auto industry production.
The transaction purchase price of $2.8 billion consists of $775 million for the equity value, as well as approximately $2 billion for the assumption or extinguishment of Aleris’ current outstanding debt and a $50 million earn-out payment, according to Novelis.