Novelis Expects EU Antitrust Approval For Aleris Deal In October

Aluminium major Hindalco Industries Ltd. expects to get the final approval from the European Union anti-trust body for acquisition of Aleris through its subsidiary Novelis before the European Commission's next scheduled meeting in October.

In 2018, Hindalco had announced its acquisition of Aleris at an enterprise value of $2.58 billion, and the deal is currently awaiting regulatory approvals in the EU, the U.S. and China.

Hindalco managing director Satish Pai on Friday declined to confirm the concessions, saying the terms of the concessions will be announced after the European Commission gave its final decision on the acquisition.

The company was expecting final approvals before the commission's next scheduled meeting in October, Pai said on the sidelines of Hindalco's AGM. Novelis had agreed to sell Aleris' Belgian plant to address the EC's worries that the deal could reduce competition and lead to higher prices, hitting carmakers in particular, media reports said.

Earlier, Hindalco chairman Kumar Mangalam Birla told shareholders that the company was not aware of the EC's clearance of the transaction. Birla said the net debt-to-Ebitda ratio at Novelis has come down from 3.1 times in FY17 to 2.65 times in FY19. This will rise to 3.8 times post-acquisition, but will come down in two years, and will generate enough cash flow to justify the acquisition, Birla said.

The rationale for the Aleris acquisition is to enhance the capacity in the auto market, enter the high-end aerospace market and backward-integrate of its Chinese operations.