Mumbai: Aditya Birla group’s Canadian subsidiary Novelis Inc on Wednesday said it will divest 50% of its stake in Japanese aluminium producer Ulsan Aluminium to Kobe Steel for $315 million as part of an agreement to form a new JV in South Korea.
The proposed joint venture will be formed by Novelis selling 50% of its ownership interest in its Ulsan Aluminium to Kobe Steel for a consideration of $315 million, which together will form a company in South Korea, Aditya Birla group said in a statement here. Through the joint venture, Novelis and Kobe Steel will jointly own and operate the Ulsan facility in South Korea, with each company remaining responsible for its metal supply and commercial relationships.
The transaction is expected to close in September, subject to customary closing conditions, the statement said.
The joint venture will help Novelis utilise its rolling capacity better at the Ulsan facility, which will continue to focus on automotive and specialty sheet to meet the increasing demand for lightweight rolled aluminium products across Asia.
As a result, Novelis’ Ulsan facility, along with its Yeongju facility in South Korea and its Changzhou facility in China, will be better positioned to deliver innovative, value-added products and services to customers, the company statement said. The transaction will generate cash proceeds to enhance Novelis’ strategic flexibility and reduce its net debt, the company added.
“We constantly identify business opportunities that allow us to deliver maximum value across our global operations and we continue to see Asia as a strategic market,” Novelis president and chief executive officer Steve Fisher said.
Located in the Korean industrial hub of Ulsan, the Novelis’ facility employs around 600 and currently focuses on the production of rolled aluminium sheet for a variety of Asian markets. The plant recently completed a major expansion, adding a new three-stand hot finishing mill as well as a pusher furnace and annealing furnaces.
Novelis is the global leader in aluminium rolled products and the world’s largest recycler of aluminium. It operates in 10 countries and had reported $10 billion revenue in fiscal 2016.