Final clearances to Novelis Inc. for acquiring Aleris Corp. end the overhang over parent Hindalco Industries Ltd’s stock. After a sharp 50% drop so far in 2020, the stock rose 6.6% on Thursday.
But the deal may not be much value-accretive for Novelis, which has to divest Aleris’s Lewisport plant in 9-12 months. The Duffel, Belgium plant will be bought by Liberty House.
While Novelis still has to find a buyer for the Lewisport plant, it will receive $340 million for the Duffel plant. Even after factoring in receipts from the sale of the Duffel plant, Novelis will have to take on considerable debt.
In fact, the acquisition is expected to cost Novelis about $2.2 billion. This would raise Hindalco’s consolidated debt by about ₹16,500 crore.