A Chinese aluminum extrusions company acquired Aleris Corp. on Monday, a move the Ohio-based aluminum products producer said it hopes will accelerate its expansion for the global automotive and aerospace markets.
Zhongwang USA LLC, owned by parent China Zhongwang Holdings Limited, acquired Aleris for $1.11 billion in cash, in addition to $1.22 billion in net debt. The deal is expected to close in the first quarter of 2017. Oaktree Capital Management had owned Aleris since 2010, with two other companies holding minority interests.
“We are excited about this transition to strategic ownership as it will allow us to accelerate our strategy to expand our capabilities to support the production of high-value advanced materials for the global automotive and aerospace markets, while maintaining our position as a leading supplier to critical regional markets like building and construction.” Aleris president and CEO Sean Stack said.
The move is not expected to affect Aleris’ location — with headquarters remaining in Beachwood, Ohio, about 20 miles east of downtown Cleveland — or its contracts, commitments, other current operations, or name. Among the growth projects still on the table is a $350 million investment in a Lewisport, Kentucky rolling plant announced in September 2014.
Stack said he expects “the transition to be seamless for our employees and customers,” with this latest development allowing for “greater financial flexibility to continue to anticipate and meet the needs of our customers well into the future.”
For Liu Zhongtian, who founded China Zhongwang in 1993 and remains the company’s chairman, the move “is an international expansion to establish a complementary business foothold” and a sign of his belief in the “potential and prospects of Aleris and the aluminum industry as a whole.”
China Zhongwang is the second-largest aluminum extrusions product developer and manufacturer in the world, and the largest in Asia. It has been traded publicly in Hong Kong since May 2009.
Aleris, meanwhile, supplies fabricated parts to the aerospace, automotive, construction and defense industries, with annual revenues estimated recently at $2.9 billion. It has more than a dozen facilities in North American, European and Chinese business units. It had been one of the larger privately-held companies in the Cleveland area, according to Crain’s Cleveland Business.