Novelis Inc. has been told to divest its Aleris’ Lewisport, Kentucky plant, even before it has finalized the acquisition.
An arbitrator assigned to resolve a dispute between Novelis and the U.S. Department of Justice ruled that aluminum and steel are not in the same relevant product market for automotive body sheet under antitrust laws. As part of its agreement with the DOJ, the ruling holds Novelis must divest those assets.
“This decision ignores the reality of the automotive body sheet market and the competition we have faced against steel for years,” said Steve Fisher, president and CEO of Novelis Inc. “Aluminum remains the material of choice for our customers, and we are going to continue to provide them with the innovative, lightweight and sustainable solutions they demand. We are moving forward with the acquisition of Aleris to realize the many benefits this transaction will bring to our employees, customers and the aluminum industry as a whole.”
Novelis signed a definitive agreement to acquire Aleris Corp. for approximately $2.6 billion including the assumption of debt back in July 2018. In doing so, Novelis said the acquisition would establish a more diverse product portfolio; integrate complementary assets in Asia including recycling, casting, rolling and finishing capabilities; broaden Novelis’ automotive business; and strengthen its ability to compete against steel through more production and innovation.
“Acquiring Aleris is the right opportunity at the right time as they are set for transformational growth,” Fisher said of the acquisition in 2018. “The significant investments they’ve 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.”
As part of the acquisition, Novelis will acquire Aleris’ 13 manufacturing facilities across North America, Asia and Europe, including its new automotive finishing lines in Lewisport, Kentucky and its facility in Duffel, Belgium.
Novelis was already looking to divest the assets of Aleris’ Duffel, Belgium facility and is awaiting the European Commission’s approval of its buyer for that plant. Once the EC approves the buyer of the Belgium plant, Novelis will close on the acquisition as quickly as possible and then start the divestiture of the Lewisport, Kentucky facility.
Novelis, headquartered in Atlanta, operates 23 facilities in nine countries, has approximately 11,000 employees and recorded $12.3 billion in revenue for its 2019 fiscal year. It is the world’s largest recycler of aluminum, at more than 70 billion cans annually, and produces aluminum rolled products for the automotive, beverage, architecture and consumer electronic markets. Among its customers are Coca-Cola, AB Inbev, Ford, Jaguar Land Rover and Samsung.
Aleris’ rolling mill in Lewisport, Kentucky utilizes direct-chill casting technology to produce aluminum rolled sheet for a variety of industries and applications.