Atlanta (Georgia): Novelis Inc, a subsidiary of Aditya Birla-led Hindalco Industries, has reaffirmed its commitment to close the proposed 2.6 billion dollar acquisition of Aleris Corporation, notwithstanding the US Department of Justice (DOJ) lawsuit to block the transaction.
The DOJ on Wednesday filed a lawsuit aimed at stopping Novelis proposed purchase of Aleris because of concern over higher prices for aluminium sheet used to make cars.
Novelis intends to vigorously defend against the DOJ's challenge, which it believes is without merit, it said in a statement adding the 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 aluminium manufacturers such as Novelis and Aleris. It ignores competition from steel automotive body sheet even though steel automotive body sheet is currently used for nearly 90 per cent of the market.
"The day-to-day reality of automotive body sheet market is aluminium automotive body sheet striving to take share from steel, and the steel automotive body sheet companies fighting back," said Steve Fisher, President and CEO of Novelis.
"We are disappointed that the DOJ has missed this but also confident that in the next phase of this process the full scope of the competition we face will be recognised appropriately," he said.
"Our merger with Aleris threatens no one and to the contrary will strengthen our ability to compete against steel, meet growing customer demand for aluminium, achieve our recycling goals and bolster our sustainability platform worldwide."
Fisher said Novelis believes that by focusing on just a small slice of steel-aluminium competition and ignoring the broader competitive process, the DOJ's theory contravenes well-established principles of market definition.
Due to the agreement reached with the DOJ on a timetable and process for resolving this dispute, Novelis is confident that the DOJ suit is not an impediment to closing the transaction by January 21, 2020, outside date under the merger agreement even if a remedy is required to address the DOJ's competitive concerns.
"The company is confident that the transaction will ultimately receive all necessary regulatory approvals in the U.S. and in other relevant jurisdictions," said Fisher in a statement.
Novelis Inc operates 23 facilities in 9 countries, has about 11,000 employees and recorded 12.3 billion dollars in revenue for its 2019 fiscal year. It is a subsidiary of Hindalco Industries, an industry leader in aluminium and copper, and metals flagship company of the Aditya Birla Group.