Beachwood-based Aleris Corp. is being acquired by Novelis Inc. in a deal valued at $2.6 billion, including the assumption of debt. The deal follows last year’s failed $2.3 billion sale to a Chinese company that fell through after national security concerns were raised by the Committee on Foreign Investment in the United States. “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,” Aleris CEO Sean Stack said. “By enhancing our capabilities to serve our customers in high-value industries, we have significantly increased the value of the company. I am confident that our assets and people will continue to thrive and contribute to Novelis’ future success.” Atlanta-based Novelis expects the deal to yield a number of significant benefits by:
- 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,” Novelis CEO Steve Fisher said in a statement. “The significant investments they’ve made in the high-demand, high-value aerospace and automotive segments have resulted in favorable long-term, global contracts.” With the deal Novelis acquires Aleris’ 13 manufacturing facilities across North America, Asia and Europe. That includes the Beachwood company’s new automotive finishing lines in Lewisport, Kentucky, which have a significant amount of capacity under contract less than a year after starting up. 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 acquisition is expected to close in nine to 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 based in Atlanta. 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. Additionally:
- Novelis’ financial adviser is Goldman Sachs & Co. LLC, and its legal adviser is Latham & Watkins LLP.
- Aleris’ financial adviser is Moelis & Co., and its legal adviser is Fried, Frank, Harris, Shriver & Jacobson LLP.
- Deutsche Bank Securities Inc. advised the Aleris board on certain matters.