A stone provoked a thousand waves. On October 10, just after the National Day holiday, a M&A transaction case that could affect the global aluminum processing industry has become the focus of the industry.
“Daily Economic News” reporter asked the National Anti-Monopoly Bureau website found that Novelis, the world’s largest auto sheet manufacturer, acquired Aleris, the world’s leading aerospace board manufacturer, and passed China’s anti-monopoly review. : In the column “Public Cases for Simple Cases of Operators”, Novelis’ acquisition of the equity of Aili Company is listed. Some industry veterans said that once the acquisition is completed, the combined capacity of the two companies will reach 1.2 million tons per year, while the global demand for automotive sheets will be around 1.3 million tons in 2017. The combined companies will occupy the global car. A large share of the board market.
This is undoubtedly a major event in the industry, but there are also different voices. An industry insider expressed doubts to reporters: Why does this type of M&A transaction take a simplified anti-monopoly approval process with a “simple case”?
Chinese companies have wanted to acquire Aleris
The reason why this transaction is very popular is also due to the industry status of Aleris. As the world’s leading R&D manufacturer of high-end aluminum rolling products, the company is not only the largest supplier of Airbus, but also a long-term partner of aircraft manufacturers such as Boeing and Bombardier. Its customers include Audi, BMW and Mercedes.
Speaking of Aili Aluminum, in fact, China’s aluminum enterprises are the first to throw the “Olive Branch”. As early as August 29, 2016, Zhongwang Group, a leading aluminum processing company in China, announced that it had acquired the entire shareholding of Aleris through US$2.33 billion through Zhongwang US, which is also the largest overseas acquisition in the history of aluminum processing in China.
As the world’s second largest and Asia’s largest manufacturer and manufacturer of industrial aluminum extrusion products, Zhongwang Group and Aleris are highly complementary in terms of products, markets and technology.
Sean Stack, then president and CEO of Aleris, has repeatedly stated that he is very welcome and looking forward to the merger: “We are very excited about this strategic equity shift, which will prompt us to accelerate the pace of strategic capacity expansion. ”
However, the original “win-and-sell” “buy” is full of resistance. According to the Securities Times, the deal was opposed by some US senators and was not completed. In November 2017, Zhongwang US and Aleris announced the termination of the merger.
Just after the Chinese company’s merger and acquisition of Aleris was forced to terminate, India Aluminum Industry Corporation followed suit to launch the acquisition of Aleris. In January 2018, China Nonferrous Metals reported that India Industrial Aluminum Corporation plans to participate in the auction of Aleris. On July 26, Inaluminium Industries announced on its subsidiary, Novelis, that Novelis will acquire Aleris for $2.6 billion. On September 30, Novelis’s acquisition of the Aleris shareholding case was publicized on the official website of the China Anti-Monopoly Bureau, with a public notice period of 10 days.
M&A will affect the global aluminum processing industry pattern?
According to the “Guiding Opinions on the Application of Simple Cases for Concentration of Operators (Trial)” issued by the Ministry of Commerce of the People’s Republic of China, “in the same relevant market, the sum of the market share of all participating operators is less than 15%” “.
According to the public information, the “aluminum strip products” of Novelis and Aleris have a share of 0~5% in the Chinese market, and the sum is less than 15%, which is the reason for applying for a simple case of China’s anti-monopoly approval.
“Noblelis declares that the relevant commodity market and its market share do not comply with industry rules.” For the above situation, an industry insider said, “’Aluminum strip’ is a very broad concept, including automotive panels, aviation panels, tanks. Materials, marine boards, building boards, aluminum alloy strips for high-speed rail, etc. According to industry practice, aluminum sheets need to be subdivided according to application purposes (such as automobiles, aviation, tanks, etc.), and cannot be declared as ‘aluminum sheets’ in general terms. band’.”
The industry further explained that the aluminum sheet materials used in different terminal products have significant differences in production processes and technical parameters. For example, automotive panels require a certain degree of strength and elongation, long process flow, narrow process window, and high precision requirements for equipment. Therefore, automotive panels are high-precision products of aluminum strips. Currently, only a few aluminum processing companies in the world can produce.
According to industry veterans, if you look at the segment of the automotive panel, the Novelis family is already big. According to incomplete statistics, the current production capacity of Nobelis’s automotive panels exceeds 800,000 tons, and the production capacity of Aili Aluminum’s automotive panels is about 400,000 tons. In 2017, the global demand for automotive panels is about 1.3 million tons, of which Novelis is global. The automotive market already has a market share of over 50%. In China, the annual demand for aluminum sheets for automobiles is about 260,000 tons. The combined market share of Novelis and Aleris is more than 50%, especially for new models. The two sides of the transaction account for the dominant position in the Chinese market.
Then, after the merger of Novelis and Aleris, will the global aluminum processing industry structure change?
“The merger of the two companies will create a ‘big Mac’ in the automotive and aerospace sector, which will not only affect the full competition in the global market, but will also have a huge impact on the Chinese aviation board and automotive panel industry.” According to senior experts, judging from the development trend of the global aluminum processing industry, the core of the future game is concentrated on high value-added aerospace boards and automotive boards. At present, a number of aluminum processing enterprises in China are also making great efforts to enter this field, including Southwest Aluminum, Northeast Light Alloy, Nanshan Group, Liaoning Zhongwang Group, South-South Aluminum and other enterprises. In recent years, they have invested a lot of money. Manpower and material resources to build aviation board and automobile board production lines, but enterprises still need time to accumulate technology, achieve batch stable production and obtain certification of supply qualification. At this stage, domestic related industries are still in the cultivation stage. Nobelis and Aili Aluminum are one of the two, and the development space of China’s aluminum processing industry may be hindered.
“In any case, Novelis’ acquisition of Aleris has a huge impact on China’s aluminum processing industry,” said an aluminum processing company executive.