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Aluminium major Hindalco, through its US-based subsidiary Novelis, is weighing a bid to acquire Cleveland, Ohio-based Aleris Corporation from its private equity owners, reports the Economic Times.
Other players gained entry into the race after the exclusive talk between China Zhongwang Holdings and Aleris Corp hit a roadblock due to heightened US national security concerns.
The Chinese company extended talk with Aleris twice but failed to get necessary approvals from US authorities as they increased scrutiny of Chinese firms taking over US companies. The exclusive talk between the two ended on October 13.
The report said the Aditya Birla Group company is likely to face competition from Norwegian giant Norsk Hydro, Japan's UACJ Corp. and Arconic (formerly Alcoa) backed by activist hedge fund Elliot Management which may value Aleris a little over USD 3.1 billion.
Favourable aluminium prices and growing demand from aerospace and automobile industries are the likely factors for Hindalco to make a bid for Aleris. The move will help Novelis to consolidate its position in the market.
If successful, this would be the second largest overseas acquisition by Hindalco after it acquired Novelis for USD 6 billion in 2007.
Kumar Mangalam Birla, in his speech at the annual general meeting of Hindalco, said the company will prepay debt of Rs 1,100 crore in September after it had prepaid Rs 7,800 crore until August. Hindalco's debt stood at Rs 17,857 as of March 2017, and the company wants to bring down the net debt to Rs 15,000 crore by March 2018.
Novelis sold 50 percent stake in Korea facility to Japan’s Kobe Steel for a consideration of USD 315 million and has refinanced debt of USD 4.3 billion in FY17.
Aleris reported annual revenue of USD 2.66 billion in 2016 and a loss of USD 76 million. The company has 13 manufacturing units spread across North America, Europe and China as per the company website.
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