US Department of Justice: Proposes Hindalco-owned Novelis to divest investment in aluminium major Aleris

The "US Department of Justice" is proposing a federal court to order Aditya Birla Hindalco-owned American company Novelis to divest its entire stakes in aluminium major Aleris due to the competitive concern with such an acquisition.

Novelis with its headquartering in Atlanta produces flat-rolled aluminium products in three segments: automotive, beverage can and speciality products. Its revenues were approximately USD 12.3 billion for the fiscal year ending 31^st March’19.

Novelis is a fully-owned subsidiary of Hindalco Industries Limited, an Indian company with its headquarter in Mumbai.

Aleris was a Delaware corporation headquartered in Cleveland, Ohio, before its acquisition by Novelis. Aleris produces flat-rolled aluminium products to the automotive, aerospace, building and construction industries among others. In 2018, Aleris' revenues were approximately USD 3.4 billion.

On 12^th May’20, Assistant Attorney General Makan Delrahim of the Justice Department's Antitrust Division said: "Today's proposed divestiture preserves competition in the market for aluminium automotive body sheet and protects automakers and American consumers by requiring the full divestiture of Aleris' North American aluminium automotive body sheet operations.”

Before filing its civil antitrust lawsuit to block the merger, the Department's Antitrust Division reached an agreement with Novelis and Aleris to refer the matter to binding arbitration if Novelis and Aleris were unable to resolve the US' competitive concern with the transaction.

Under the arbitration terms, Novelis agreed to divest Aleris' aluminium automotive body sheet operations in North America if the US prevailed in the arbitration.

The arbitrator ruled in favour of the United States, holding that aluminium automotive body sheet constitutes a relevant antitrust product market. On 12^th May’20, the Department filed a proposed final judgment that, if approved by the court, would fully resolve the competitive harm alleged in the lawsuit.

The "Aditya Birla Group" flagship Hindalco secured its position as the world's largest producer of value-added aluminium products with the completion of the USD 2.8 billion acquisition of Aleris by its wholly-owned US subsidiary Novelis Inc. last month.

The group said in a statement in April’20: “The acquisition of the US-based rolled products major Aleris Corporation positions Hindalco as one of the world's largest aluminium companies, with a global footprint spanning 49 manufacturing facilities in North America, Europe and Asia.”