Novelis Inc., the US subsidiary of India’s Hindalco Industries Ltd has confirmed to purchase aluminum processor Aleris Corp for $2.6 billion.
In 2007, Hindalco expanded its aluminum business in the US by obtaining aluminum re-rolling organization Novelis for $5.9 billion.
Hindalco said at a press conference that the deal for Aleris will be the group’s biggest acquisition since then and will increase the production capacity of Novelis, one of the world’s biggest suppliers of aluminum sheets for beverage cans and car parts – by nearly a quarter to 4.4 million tonnes.
Kumar Mangalam Birla, chairman of Aditya Birla Group stated that the $2.6 billion deal will include $775 million of equity and $1.8 billion of debt which will be funded through Novelis. Further, he added, “This (Aleris acquisition) also diversifies our product mix to include some premium segments where we have not been present such as the high-end aerospace domain.”
Novelis’s expansion in the construction market
Steve Fisher, President, and CEO, Novelis Inc. said, “Acquiring Aleris is the right opportunity at the right time as they are set for transformational growth.” Further, he added, “Their 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.”
Currently, Novelis Inc manufactures and sells aluminum rolled products, operating through North America, Europe, Asia, and South America segments. The company’s products are mostly used in the beverage and food cans, electronics equipment, containers, packaging, automotive, architectural, foil and technical products, and other industrial applications.
After the deal, Novelis will be operating in the US construction market. Additionally, it will serve an extended base of clients in the auto industry.
Birla said in the conference that the combining Novelis and Aleris will have annual revenues of $15 billion, and its parent company Hindalco which is India’s biggest flat-rolled aluminum producer, will have annual revenues of $21 billion.
