Kumar Mangalam Birla, Chairman Aditya Birla Group and Novelis, said, "The Aleris deal marks a major milestone for Novelis, on its path to global leadership. The closure of this deal amidst challenging market conditions, reflects our conviction in the Aleris business and its value to our metals portfolio. Periods of turmoil have historically seen the emergence of champions, powered by quality leadership and sound business fundamentals. This is a long- term strategic bet, much like Novelis was in 2007."
Novelis is a global producer of flat-rolled aluminum products and one of the largest recyclers of aluminum. It specialises in segments such as packaging, beverage cans, automotive and aerospace among others.
With the addition of Aleris' operational assets and workforce, Novelis 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.
"The Aleris deal crucially enables the further diversification of our metals portfolio into other premium market segments, most notably aerospace. Through the creation of an industry champion, we are reinforcing our commitment to our customers, employees and shareholders. At the same time, with this further expansion in our aluminum portfolio, we have taken a decisive step towards a more sustainable future," added Birla.
Beyond its strategic benefits, the acquisition will generate approximately USD 150 million in synergies and creates a strong financial profile for the company.
"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," said Steve Fisher, president and CEO, Novelis. "With a world-class workforce, a presence in the most competitive and technically demanding end-markets, and the ability to deliver rapid, adaptive and sustainable solutions, Novelis will be able to even better serve our customers."
The closing purchase price of USD 2.8 billion consists of USD 775 million for the equity value, as well as approximately USD 2 billion for the assumption or extinguishment of Aleris' current outstanding debt and a USD 50 million earn-out payment.
"This acquisition strengthens Novelis' leadership position in the aluminum industry and clearly defines Hindalco Industries as the preeminent company in the global metals sector," said Satish Pai, managing director of Hindalco Industries and director, Novelis. "I am proud of the work the Novelis and Aleris teams have done to close this transaction and thereby position Novelis for future growth and success."
Novelis will acquire Aleris' 13 plants across North America, Europe and Asia; however, to satisfy regulatory conditions, the company is required to divest Aleris' plants in Lewisport, Kentucky, USA, and Duffel, Belgium, as per an earlier announcement.