Atlanta’s rolled and recycled aluminium firm Novelis Inc. yesterday took to the court of public opinion its defense of a lawsuit against it filed by the United States Department of Justice challenging its attempted purchase of Cleveland rolled aluminium firm Aleris International, Inc.
Novelis said in a press release that the DOJ’s suit to block the transaction rested on the faulty ground of assuming that the sole competition it has in the aluminium auto body manufacturing market comes from the target of its buyout effort.
“The day-to-day reality of the automotive body sheet market is aluminum automotive body sheet striving to take share from steel, and the steel automotive body sheet companies fighting back,” explained Novelis’ CEO and President Steve Fisher.
“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 recognized appropriately. Our merger with Aleris threatens no one, and to the contrary will strengthen our ability to compete against steel, meet growing customer demand for aluminum, achieve our recycling goals, and bolster our sustainability platform worldwide.”
Novelis continued by challenging the DOJ’s argument that steel automotive body sheet does not significantly constrain the price of its aluminium counterpart. The firm pointed out that the DOJ’s argument takes too narrow a view of the entire competition between steel and aluminium, as aluminium producers often must sell their customers on using aluminium instead of steel, which is an often fiercely competitive process.
Additionally, Novelis says the DOJ ignores the significant bargaining power of automakers, as their bid processes are typically more than sufficient to create competitive pricing.
The firm closed by assuring the market that the DOJ’s suit does not represent an impediment to the agreed-upon closing date in January, as the parties have agreed upon a timetable that will have the process, including any remedies, completed by the closing date.
Novelis is a subsidiary of Mumbai’s Hindalco Industries Ltd. Based in Atlanta, the firm accounts for almost half of Hindalco’s consolidated revenue. The world’s largest recycler of aluminium, Novelis conducts operations in ten different countries, employs around eleven thousand people, and reported US$10 billion in revenue for the most recent fiscal year.