Aluminum, rolled products producer Aleris extends merger deal with Chinese firm

Wednesday, Sep 06, 2017

US-based Aleris International has extended to September 15 a merger agreement with a Chinese company, but did not say Tuesday if the move is tied to speculation that Aleris may be in the takeover sights of Indian billionaire Kumar Mangalam Birla.

The Cleveland, Ohio-based aluminum and rolled products producer now has until September 15 to work out a mutually acceptable deal with Zhongwang USA LLC, controlled by Chinese businessman Liu Zhongtian, Aleris spokesman Jason Saragian said in an email to S&P Global Platts. Initially, the deal was scheduled to expire August 31.

Saragian would not say why the potential corporate combination was stretched out to mid-September despite media reports last week that Birla might be interested in bidding for both Aleris and Constellium, an Amsterdam-based aluminum producer.

"I wouldn't speculate," Saragian said, "but I can say that we remain in discussions with Zhongwang USA on the pending acquisition of Aleris. ... to allow those discussions to continue, we have decided to extend our merger agreement through September 15."

Saragian did not indicate what might happen if no definitive arrangement is reached by then.

The privately owned producer has encountered stiff pushback from the US government over its willingness to be sold to Zhongwang. Recently, Aleris and Zhongwang withdrew for a second time their voluntary merger notice to the Committee on Foreign Investments in the United States, which has continued to raise security concerns about the deal.

Those security concerns conceivably have not eased, given US President Donald Trump's recent criticism of Chinese leadership for not doing more to corral the nuclear ambitions of North Korea, a major client.

The Trump administration has even threatened to cut off trade with countries, such as China, that do business with North Korea, sparking fears of a major trade war.

Aleris is completing a $350 million aluminum auto body sheet expansion at its rolling mill in Lewisport, Kentucky. All equipment has been installed and in August, Aleris was in the process of wrapping up a hot mill outage.

Aleris broke ground for the project three years ago. It will allow for the production of 480 million pounds/year of aluminum auto body sheet at the Hancock County location along the Ohio River.

During its second-quarter earnings call August 9, Aleris posted a $2 million net loss during the period, narrowed sharply from a $13 million loss in the same period a year ago.

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