Hindalco Industries’ U.S. subsidiary Novelis Inc. has said it is ‘committed to closing’ its proposed $2.6 billion acquisition of Aleris Corporation, notwithstanding the U.S. Department of Justice (DoJ) lawsuit to block the transaction.
“Novelis intends to vigorously defend against the DoJ’s challenge, which it believes is without merit. DoJ suit ignores the full scope of automotive body sheet competition. “The DoJ lawsuit is based on the contention that the only relevant competition among automotive body sheet providers is that among aluminum manufacturers such as Novelis and Aleris,” said a statement from Novelis, adding that the claim ignored competition from steel automotive body sheet sector, even though the latter’s products are currently used for nearly 90% of the market’.
“The day-to-day reality of the automotive body sheet market is aluminum automotive body sheet striving to take share from steel, and the steel automotive body sheet companies fighting back,” said Steve Fisher, president and CEO, Novelis Inc.
To prevail in its lawsuit, the DoJ will need to prove that there is a distinct “relevant market” for aluminum automotive body sheet, which means that steel automotive body sheet does not significantly constrain the price and quality of aluminum automotive body sheet.
Time line, process
Due to the agreement reached with the DoJ on a timetable and process for resolving this dispute, Novelis is ‘confident that the suit is not an impediment to closing the transaction by the January 21, 2020, outside date under the merger agreement, even if a remedy is required to address the DoJ’s competitive concerns’.
Novelis is simultaneously fending off an anti-trust challenge by the European Commission on the Aleris deal. Satish Pai, MD, Hindalco Industries, told The Hindu, “We are expecting a decision on this soon from the European Commission.”