Hindalco arm Novelis to acquire Aleris for $2.58 bn
27 July 2018
Aditya Birla Group company Hindalco today announced its wholly-owned subsidiary Novelis Inc has signed a definitive agreement to acquire Aleris Corporation, a global aluminium rolled products major, based in the United States, for $2.58 billion, in a debt finance deal.
Aleris has a global footprint with manufacturing facilities in Europe, the US and Asia. Its acquisition strengthens Novelis’ leadership position in the fastest growing automotive segment with best in class assets in Lewisport, US and Duffel, Belgium, Hindalco said in a release.
With the acquisition Novelis enters the high-end aerospace segment, with technological capabilities at Aleris’ manufacturing and research and development facility in Koblenz, Germany.
Aleris has a fully integrated metal value-chain in high growth Asian market, which includes the modern Zhenjiang, China facility.
The acquisition will also help Hindalco’s value-added aluminium products (VAP) business in India to develop its capabilities in the building and construction segment.
“The acquisition of Aleris is the next phase of our aluminium value added products growth strategy. This will solidify our position as the world’s No 1 aluminium value-added products player. Post acquisition, we are well placed to serve our customers across geographies in automotive and now the high-end aerospace segments,” Kumar Mangalam Birla, chairman, Hindalco, said.
“We will have presence throughout the downstream aluminium value chain in Asia, positioning us for future growth in the region. This also enhances the access to world-class manufacturing capabilities for our existing Indian aluminium value added operations and accelerates our path to making world-class products in India,” he added
Since Hindalco’s $6-billion acquisition of Novelis in August 2007, Novelis has further invested $2 billion in the business over the last decade. The focus has been on building an early mover position in the automotive markets, creating differentiation through its sustainable operating model of recycling and deepening its commitment to future growth markets in South America and Asia.
Novelis today is the world’s Number 1 company in the aluminium value-added products segment in terms of size and in segments like automotive and beverage can and its earnings have grown many fold since its acquisition.
Aleris has invested approximately $900 million in the last few years in the automotive and aerospace businesses. The ramp-up of these capacities in the near-term will significantly bolster Novelis’ growth across regions and market segments. As a result, Novelis will have a further diversified business portfolio across regions, segments and customers.
Aleris has long-term contracted business with blue chip-customers in sectors like automotive and aerospace. With a global research and development hub in Koblenz, Germany, and a track record of developing and producing world-class products, Aleris will give a boost to Novelis’ R&D centre across the Atlantic in Kennesaw, US, bringing new alloy and manufacturing expertise enabling it to stay ahead of the markets in the future, the company stated.
Aleris’ modern Zhenjiang facility located close to Novelis’ facility in Changzhou enhances Novelis’ competitive position in Asia by giving it access to SHFE (Shanghai Futures Exchange) metal integration and strengthening its market leadership as an aluminium sheet supplier in the world’s largest and fastest growing automotive market where electric vehicle demand is expected to grow significantly requiring lightweight materials like aluminium for both batteries and car bodies.
Aleris is the market leader in the building and construction segment in the US, driven mainly by its unique recycling-enabled continuous cast technology at Uhrichsville and other plants in the US.
Aleris is also in early stages of ramping up its automotive investments in Lewisport, US. This plant draws its technological and manufacturing expertise in automotive from the well-established auto plant in Duffel, Belgium.
Post acquisition, proforma consolidated revenues are expected to be approximately $21 billion, with an employee base of around 40,000.
Hindalco said the acquisition of Aleris Corp by Novelis Inc is subject to customary closing conditions and regulatory approvals.