The stock gained as much as 9 percent to Rs 124 and is the top gainer on the Nifty 50 index today.
The company completed the acquisition of Aleris through its wholly-owned subsidiary Novelis Inc. at an enterprise-value of $2.8 billion. The EV is higher than the previously-guided figure of $2.58 billion on account of higher debt assumed.
Nearly two years after Hindalco Industries Ltd. signed a deal to buy Aleris Corp., the billionaire KumarMangalam Birla’s company finally_completed the takeover through its wholly owned subsidiary.
“The closure of this deal amidst challenging market conditions reflects our conviction in the Aleris_business and its value to our metals portfolio…This is a long-term strategic bet, much like Novelis was in 2007,” said Group Chairman Kumar Mangalam Birla.
This comes at a time when the metals and mining sector is undergoing a severe downturn and tepid demand growth globally due to the Covid-19 outbreak and when the other major deal, Tata SteelThyssenkrupp JV, fell apart after the European Commission declined to approve
“The Aleris deal crucially enables further diversification of our metals downstream portfolio into other premiummarket segments, most notably aerospace,” Birla said.
The closing purchase price of $2.8 billion consists of $775 million for the equity value, as well as approximately $2.0 billion forthe assumption of Aleris’ current outstanding debt and a $50 million earn-out payment.
The US Department of Justice filed an antitrust lawsuit during September 2019 seeking to block the Aleris purchase by Novelis as it was said to be violating the competition norms in the auto partsindustry in North America. However, the company obtained a nod from the antitrustbody on the condition that the company will sell Aleris’ aluminium sheets operations in Lewisport, Kentucky.
“Novelis will acquire Aleris’ 13 plants across North America, Europe and Asia; however, to satisfyregulatory conditions, the company is required to divest Aleris’ plants in Lewisport, Kentucky, U.S.A., and Duffel, Belgium, as announced earlier,” the company said.
Aleris’ Adjusted EBITDA stood at $388 million and the debt levels have increased since the initialacquisition announcement due to a rise in working capital to support the ramp-up of operations.
