Novelis Inc., announced that it had signed a definitive agreement to acquire Aleris Corporation, a global supplier of rolled aluminium products, for approximately $2.6 billion including the assumption of debt.
For Novelis, Aleris, and their customers, the proposed acquisition will deliver a number of significant benefits by establishing a more diverse product portfolio, including aerospace, beverage can, automotive, building and construction, commercial transportation and specialty products. This move will integrate complementary assets in Asia to include recycling, casting, rolling and finishing capabilities and allowing Novelis to more efficiently serve the growing Asia market.
The acquisition helps Novelis broaden its automotive business to meet growing demand and diversifying its global footprint and customer base as also strengthen the ability of the company to compete against steel by gaining a greater platform for production, innovation and service.
“Acquiring Aleris is the right opportunity at the right time as they are set for transformational growth,” said Steve Fisher, President and CEO, Novelis Inc. “The significant investments they’ve made in the high-demand, high-value aerospace and automotive segments have resulted in favorable long-term, global contracts. These investments, coupled with a diverse and talented workforce, will add tremendous value to our organisation and allow us to deliver the highest quality innovative aluminium solutions to our customers.”
As part of the acquisition, Novelis will acquire Aleris’ 13 manufacturing facilities across North America, Asia and Europe. Aleris’ new automotive finishing lines in Lewisport, Kentucky, of which a significant amount of its 200kt capacity is already under contract, along with 100kt of auto capacity in Duffel, Belgium, will allow Novelis to further diversify its global footprint and customer base. In addition, Aleris’ Zhenjiang facility is strategically located near Novelis’ existing Changzhou plant, adding value through logistical efficiencies, closed-loop recycling, and providing greater opportunity for customer collaboration.
“With the support of our private equity owners, our Aleris team has done an excellent job of implementing our company’s strategic transformation over the past several years. By enhancing our capabilities to serve our customers in high-value industries, we have significantly increased the value of the company,” Sean Stack, Aleris chairman and CEO said. “I am confident that our assets and people will continue to thrive and contribute to Novelis’ future success.”
The acquisition is subject to customary closing conditions and regulatory approvals and is expected to close in 9-15 months. Until the closing, the companies will continue to operate as separate entities. Following close, the two companies will integrate Aleris into Novelis, which will remain headquartered in Atlanta.
The combined company will have pro forma revenues of approximately $15 billion and will operate 37 facilities, across 11 countries, with an employee base of approximately 16,500.