Novelis to Buy Global Aluminum Supplier for $2.6B, Keep HQ in Atlanta
Friday, July 27th, 2018
Novelis Inc., the world leader in aluminum rolling and recycling, announced it has signed a definitive agreement to acquire Aleris Corporation, a global supplier of rolled aluminum products, for approximately $2.6 billion including the assumption of debt.
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 forecasted to peak below 4x at closing, and return to 3x in approximately two years.
"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 organization and allow us to deliver the highest quality innovative aluminum solutions to our customers."
Over the past several years, Novelis has successfully brought online $2 billion in production assets by utilizing its best-in-class manufacturing expertise in rolling and finishing. This proven track record of safely and efficiently ramping up assets along with our collective expertise will enable Novelis to enhance Aleris' operations, while continuing to deliver innovative solutions that meet customers' needs and drive shareholder value.
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.
"Our focus on keeping a disciplined balance sheet will continue," said Devinder Ahuja, Senior Vice President and Chief Financial Officer of Novelis. "The pro forma net debt to Adjusted EBITDA is forecasted to peak below 4x at closing, and return to 3x in approximately two years."
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.