Hindalco climbs 9% on completion of Aleris acquisition

NEW DELHI: Shares of Hindalco climbed 9 per cent in Wednesday’s trade after Aditya Birla Group flagship completed the $2.8 billion acquisition of Aleris by its wholly-owned US subsidiary Novelis Inc.

With this, Hindalco cemented its position as the world's largest producer of value-added aluminium products.

Kotak Institutional Equities, however, said that the benefit of the acquisition appears significantly diluted without auto assets and bleak outlook for aerospace in the medium term.


“With earnings hit due to Covid-19, Aleris would increase Hindalco’s net debt/Ebitda from 3.5 times to 4.4 times in FY2021. The leverage is manageable but uncomforting in current times,” it said.

The closing purchase price of $2.8 billion consists of $775 million for the equity value, as well as approximately $2.0 billion for the assumption of Aleris’ current outstanding debt and a $50 million earn-out payment.

Aleris’ Adjusted Ebitda stood at $388 million and the debt levels have increased since the initial acquisition announcement due to a rise in working capital to support the ramp-up of operations.

“With a world-class workforce, a presence in the most competitive and technically demanding end-markets, and the ability to deliver rapid, adaptive and sustainable solutions, Novelis will be able to even better serve our customers.” said Novelis’ CEO, Steve Fisher.

The shares of the company closed 1.10 per cent higher at Rs 115.05 on BSE.