Mumbai: Hindalco on Thursday said it will acquire US-based aluminium producer Aleris Corporation for $2.58 billion through its wholly-owned subsidiary Novelis.
Announcing the acquisition here, Kumar Mangalam Birla, chairman, Aditya Birla Group, said, "Acquiring Aleris, in a debt-funded deal, will help diversify the product mix for Novelis by giving access to the aerospace segment."
The deal will lead to the creation of second largest aluminium company in the world with $21 billion revenue, and 40,000 employees, he said.
Aleris is a global supplier of aerospace and automotive aluminium rolled products.
"The acquisition of Aleris is the next phase of our aluminium value-added products growth strategy. This will solidify our position as the world's No.1 aluminium value-added products player," he added.
"We will have a presence throughout the downstream aluminium value chain in Asia, positioning us for future growth in the region," said Birla.
According to him, Aleris is a value accretive acquisition for Hindalco and potential synergies from the acquisition are $150 million on a recurring basis.
At a market segment level, the acquisition enriches the portfolio with the fast-growing automotive segment and entry into the high-end technology-driven aerospace segment, an official release said on Thursday.
The deal is subject to regulatory approvals, it added.
Hindalco managing director Satish Pai said Aleris has invested $900 million in the last two years, "and the only investment in the company we will have to do is up to $350 million for integration of an auto plant in China over the next two to three years".
Devinder Ahuja, senior vice-president and chief financial officer, Novalis, said the acquisition will add $2.6 billion to the current debt of $3.5 billion for his company.
As part of the acquisition, Novelis will acquire 13 manufacturing facilities of Aleris across North America, Asia and Europe.
Updated Date: Jul 26, 2018 17:23 PM