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Hindalco-Novelis completes acquisition of Aleris

14 April 2020

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Cements position as world’s No.1 aluminium value-added products player

  • Deal closed at an Enterprise Value of $2.8 billion. EV multiple at an attractive 7.2x
  • Potential synergy benefits of $150 million on a recurring basis
  • Marks Novelis’ entry into the high-end aerospace segment
  • Fully integrated metal value-chain play in China with Aleris’ modern Zhenjiang facility
  • Positions Novelis as the leader in the Building and Construction segment in the U.S.

Mumbai: Hindalco Industries Limited, the Aditya Birla Group metals flagship company, today announced the completion of the Aleris acquisition by its wholly-owned subsidiary Novelis Inc. The acquisition of the US-based rolled products major, Aleris Corporation, positions Hindalco as one of the world’s largest aluminium companies, with a global footprint spanning 49 state-of-the-art manufacturing facilities in North America, Europe and Asia.

“The Aleris deal marks a major milestone for Hindalco and Novelis, on their path to global leadership. The closure of this deal amidst challenging market conditions, reflects our conviction in the Aleris business and its value to our metals portfolio. Periods of turmoil have historically seen the emergence of champions, powered by quality leadership and sound business fundamentals. This is a long-term strategic bet, much like Novelis was in 2007,” said Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group. “The Aleris deal, crucially enables the further diversification of our metals downstream portfolio, into other premium market segments, most notably aerospace. Through the creation of an industry champion, we are reinforcing our commitment to our customers, employees and shareholders. At the same time, with this further expansion in our aluminium portfolio, we have taken a decisive step towards a more sustainable future.”

With the addition of Aleris’ operational assets and workforce, Novelis is poised to more efficiently serve the growing Asia market by integrating complementary assets in the region including recycling, casting, rolling and finishing capabilities.

“The Aleris acquisition takes forward our aluminium value-added products strategy and gives us entry into high-end aerospace. It further insulates Hindalco-Novelis from global price volatility and sharpens our focus on the downstream business. Aleris enhances our strategic position in Asia and also solidifies our position as a leading global metals player, with a stronger presence across the U.S. and Europe as well. I thank the team for closing this important deal," said Mr. Satish Pai, Managing Director of Hindalco Industries.

Beyond its many strategic benefits, the acquisition will generate approximately $150 million in synergies and create a strong financial profile. In addition, combined net debt to Adjusted EBITDA of approximately 3.3x is within the recently updated guidance of below 3.5x and well below the initial outlook of below 4x at transaction announcement.

The closing purchase price of $2.8 billion consists of $775 million for the equity value, as well as approximately $2.0 billion for the assumption or extinguishment of Aleris’ current outstanding debt and a $50 million earn-out payment. Legacy Aleris debt levels have increased since the initial acquisition announcement due to rise in working capital to support the ramp up of operations, while the earn-out is related to stronger than expected performance by Aleris’ U.S. business. On a trailing twelve-month basis ending 31 December 2019, legacy standalone Aleris Adjusted EBITDA stood at $388 million, higher than that estimated at the time of deal announcement. Despite the increase in legacy Aleris debt, the implied enterprise value multiple of 7.2x, is in line with our acquisition case, on account of better EBITDA performance.

“Today is a transformational moment in our company’s history, and I have never been more confident in our ability to deliver even more value to our customers, colleagues and the communities where we live and work,” said Mr. Steve Fisher, President and CEO, Novelis Inc. “With a world-class workforce, a presence in the most competitive and technically demanding end-markets, and the ability to deliver rapid, adaptive and sustainable solutions, Novelis will be able to even better serve our customers.”

Novelis will acquire Aleris’ 13 plants across North America, Europe and Asia; however, to satisfy regulatory conditions, the company is required to divest Aleris’ plants in Lewisport, Kentucky, U.S.A., and Duffel, Belgium, as announced earlier.

About Hindalco
Hindalco Industries Limited is the metals flagship company of the Aditya Birla Group. A US$18.7 billion metals powerhouse, Hindalco is the world’s largest aluminium rolling and recycling company, and a major copper player. It is also one of Asia’s largest producers of primary aluminium. Guided by its purpose of building a greener, stronger, smarter world, Hindalco provides innovative solutions for a sustainable planet. Its wholly-owned subsidiary Novelis Inc. is the world’s largest producer of aluminium beverage can stock and the largest recycler of used beverage cans (UBCs). Hindalco’s copper facility in India comprises a world-class copper smelter, downstream facilities, a fertiliser plant and a captive jetty. The copper smelter is among the world’s largest custom smelters at a single location. Hindalco’s global footprint spans 36 manufacturing units across 10 countries.

About Novelis
Novelis Inc. is driven by its purpose to shape a sustainable world together. As a global leader in innovative products and services and the world's largest recycler of aluminum, we partner with customers in the automotive, beverage can and specialties industries to deliver solutions that maximise the benefits of sustainable lightweight aluminum throughout North America, Europe, Asia and South America. Novelis is a subsidiary of Hindalco Industries Limited, an industry leader in aluminum and copper, and the metals flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai, India. For more information, visit .

About Aleris
Aleris is a privately held, global leader in aluminum rolled products serving diverse industries including aerospace, automotive, building and construction, commercial transportation and industrial manufacturing. Headquartered in Cleveland, Ohio, Aleris operates production facilities in North America, Europe and Asia.

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