Novelis Moves One Step Closer in Finalizing Acquistion of Aleris Corp.

SEATTLE (Scrap Monster): As per media reports, the Aditya Birla Group is close to sign a definitive agreement on purchase of assets of Ohio-based Aleris Corp. The acquisition is estimated to be valued around $2.6 billion.

According to sources close to the deal, talks are in final stages and the deal is likely to be signed in the next few weeks. The talks between the two parties, which had commenced almost eight months back, had reached a standstill on concerns over antitrust issues. It must be noted that an earlier acquisition bid for Aleris by Chinese aluminum maker Zhongwang was turned down by the U.S. Committee on Foreign Investment (CFI). Meanwhile, the talks gained momentum after Kumar Mangalam Birla, Chairman, Aditya Birla group himself stepped in to lead the negotiations.

ALSO READ: Novelis Invests $300 Million in New Kentucky Aluminum Sheet Plant

Last week, the board of directors of Novelis- the Atlanta-based aluminum producing subsidiary of Aditya Birla group had taken final call to proceed with the proposed acquisition. The board had also approved a plan to raise funds for the acquisition. Accordingly, it was decided to incorporate a separate entity under Novelis Inc, which in turn will act as the bidding company. The bidding company will raise around $1.8 billion debt, while Novelis will raise the remaining amount. The funding plan also comprises a term B loan and an additional bridge loan amounting to $1 billion.

The acquisition of Aleris, currently owned by private equity funds Oaktree Capital Group LLC and Apollo Global Management LLC, is expected to provide big boost to Novelis’ rolled fabricated aluminum products portfolio through significant expansion of downstream capacities. Incidentally, Aleris owns 13 facilities spread across North America, Europe and China.

Meantime, spokespersons of Aleris and Aditya Birla Group declined to comment on the matter.