Novelis to Acquire Aleris
By Metal Center News Staff
on Jul 26, 2018
Atlanta-based aluminum roller and recycler Novelis Inc. will acquire Cleveland-based Aleris for approximately $2.6 billion. Aleris is a producer of rolled aluminum products.
"Acquiring Aleris is the right opportunity at the right time as they are set for transformational growth," said Steve Fisher, president and CEO of Novelis. "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 organization and allow us to deliver the highest quality innovative aluminum solutions to our customers."
Aleris outlined a number of benefits of the acquisition. They include:
Establishing a more diverse product portfolio, including aerospace, beverage can, automotive, building and construction, commercial transportation and specialty products;
Integrating complementary assets in Asia to include recycling, casting, rolling and finishing capabilities and allowing Novelis to more efficiently serve the growing Asia market;
Broadening Novelis' automotive business to meet growing demand and diversifying its global footprint and customer base;
Strengthening ability to compete against steel by gaining a greater platform for production, innovation and service;
Executing a fully debt-funded deal with leverage forecast to peak below 4x at closing, and return to 3x in approximately two years.
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, Ky., of which a significant amount of its 200-kiloton capacity is already under contract, along with 100-kiloton 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, the company claims.
"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."
This is the second attempt at a sale of Aleris to another player in the industry. Two years earlier, Aleris agreed to be acquired by China's Zhongwang, though the deal fell through amid the Chinese company's ongoing trade issues.
Following close, the two companies will integrate Aleris into Novelis, which will remain headquartered in Atlanta.