Novelis to acquire Aleris
Atlanta-based aluminum producer Novelis, a part of the Mumbai-based Aditya Birla Group, has signed a definitive agreement to acquire Cleveland-based aluminum producer Aleris. The announcement follows speculation about the purchase previously reported by Recycling Today.
The transaction is valued at $2.6 billion, an amount that includes the assumption of some debt by Novelis. The current majority owner of Aleris is Los Angeles-based Oaktree Capital Management, which helped purchase the firm out of bankruptcy protection in 2010.
In addition to owning Novelis, Aditya Birla owns Hindalco, one of India’s largest aluminum producers.
The Novelis bid for Aleris follows an unsuccessful one in 2017 by investors associated with Chinese aluminum producer Zhongwang Holdings Ltd.
Novelis, in a news release announcing the agreement, points to what it calls several benefits of the transaction:
- establishing a more diverse product portfolio that includes aerospace, automotive, beverage can, 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 the company’s ability to compete against steel by gaining a greater platform for production, innovation and service; and
- executing a fully debt-funded deal with leverage forecasted to peak below four times at closing and provide a return to a multiple of three in about two years.
“Acquiring Aleris is the right opportunity at the right time, as they are set for transformational growth,” says Steve Fisher, Novelis president and CEO. “The significant investments [Aleris has] made in the high-demand, high-value aerospace and automotive segments have resulted in favorable long-term, global contracts. These investments, coupled with a diverse and talented workforce, will add tremendous value to our organization and allow us to deliver the highest quality innovative aluminum solutions to our customers.”
If the deal is approved, Novelis will acquire Aleris’ 13 global manufacturing facilities, including melt shops that consume aluminum scrap in several locations.
The acquisition also will include Aleris’ new automotive finishing lines in Lewisport, Kentucky, which has a significant amount of its 200,000 metric tons of capacity already under contract. The deal also includes 100,000 metric tons of auto capacity at Aleris’ facility in Duffel, Belgium.
In addition, the deal will boost Novelis’ operations in China, according to the firm. Aleris’ Zhenjiang, China, facility is near Novelis’ existing Changzhou plant, which could provide greater opportunity for customer collaboration, Novelis says.
“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,” says Sean Stack, Aleris chairman and CEO. “I am confident that our assets and people will continue to thrive and contribute to Novelis’ future success.”
View a video of Fisher talking about the merger at www.RecyclingToday.com/video/novelis-ceo-on-aleris- acquisition.
Thalheimer purchases Mega Metals
Thalheimer, which was founded in 1939, is a processor of brass, copper, nickel alloy, cupro, monel, hi-temp alloys and stainless steel scrap. The company says it processes mixed loads of alloyed and nonalloyed scrap to produce complex blends with specific chemical properties required by its customers, which include foundries, refiners and mills.
Over the last several years, Thalheimer has entered the aerospace industry by processing hi-temp alloys, and the addition of Mega Metals and its processing center in Phoenix further expands the company’s expertise into the titanium market.
Founded in 1985 by Robert Megdal, Mega Metals was led by an executive team that had extensive expertise in titanium metals, according to a news release from Thalheimer. These team members will become a key part of the Thalheimer leadership team. Mega Metals will operate as a division within Thalheimer and will maintain operations from its Phoenix location with no changes to its leadership, according to Thalheimer.
Rich Reiner, CEO of Thalheimer, says, “Mega Metals is a leading specialty recycler in the titanium market with an unparalleled reputation in the industry based on its deep technical expertise and best-in-class customer service. We look forward to working with David Megdal and his team to continue to drive growth in Titanium recycling.”
Megdal, who is vice president of Mega Metals, says, “We look forward to partnering with the team at Thalheimer to continue to make Mega Metals the best source for titanium products. I’m excited to work with Rich and his team to continue to grow Mega Metal’s leadership in the titanium market.”
Big River Steel to expand EAF production facility
Big River Steel has announced plans to expand its electric arc furnace (EAF) steel production facility in Osceola, Arkansas. The expansion will double Big River Steel’s hot-rolled steel production capacity to 3.3 million tons annually.
Additionally, the expansion will facilitate the company’s ability to produce higher grades of electrical steel, demand for which is expected to increase with continued focus on energy efficiency and the increase in hybrid and electric vehicle sales, Big River Steel says.
“Our $1.2 billion expansion will further cement Big River Steel’s position as a global leader in terms of advanced manufacturing and environmental stewardship,” says Dave Sticker, Big River Steel CEO. “Announcing this investment less than 18 months after beginning operations is a testament to the hard work and great success of the men and women on our team.”
The facility expansion has begun, with Germany-based engineering company SMS Group GmbH taking the lead on the project. Major construction activity is expected to begin later in 2018 and will take about two years, Big River Steel says.
In addition to doubling its hot-rolled steel production and enhancing its electrical steel capabilities, the company says it is considering installing a “next generation” coating line that is focused on automotive applications. Big River Steel says this particular installation would involve a steel industry partner.
The company indicates it also is looking at opportunities to supply the market with grain-oriented steel products, which are used in making transformers and generators. That move might happen as part of this expansion phase or as a future endeavor, Big River Steel says.