Indian billionaire Kumar Mangalam Birla is evaluating possible bids for Constellium NV and Aleris Corp as his conglomerate seeks to grow its aluminum operations overseas, people with knowledge of the matter said.
Deliberations are at an early stage, and Aditya Birla Group hasn't yet decided whether to proceed with an offer for either business, according to the people. The conglomerate could decide to pursue an acquisition through Novelis Inc, a unit of Birla's Mumbai-listed Hindalco Industries Ltd, one of the people said, asking not to be identified because the information is private.
Shares of Constellium jumped 8.1 per cent in US trading Thursday to close at the highest level in more than two years. The move extended this year's gains to 92 per cent, giving the company a market value of $1.2 billion.
Constellium, the Dutch maker of aluminum products, is weighing options after drawing takeover interest, people familiar with the matter said in August. Ohio-based Aleris had agreed to sell itself to Zhongwang USA LLC for $2.3 billion including debt, but the deal was left in limbo after US officials raised national-security concerns about the Chinese bidder and the companies withdrew an application for regulatory approval.
Successful turnaround
"Hindalco successfully managed to turn around Novelis, which was once considered a white elephant," Sanjiv Bhasin, an executive vice-president at local brokerage India Infoline Ltd, said by phone on Friday. "The way forward in the US, especially with an expectation of Trump protectionism, is an acquisition."
Hindalco is focusing on downstream products as it seeks to take advantage of Prime Minister Narendra Modi's promise to boost infrastructure spend in Asia's third-largest economy. Its Atlanta-based Novelis unit has a deleveraged balance sheet and is healthy enough to take advantage of "any growth opportunities that present themselves," Hindalco Managing Director Satish Pai said in a May interview.
Representatives for Constellium and Aleris declined to comment, while a representative for Aditya Birla Group didn't immediately reply to emailed queries.
Constellium sells aircraft parts, industrial coil, window frames and car bodies to aerospace, automotive and packaging customers around the world. Aleris makes rolled aluminum sheet products at manufacturing sites in North America, Europe and China, according to its website.
Bloomberg