Zhong­wang drops Aleris bid af­ter reg­u­la­tory snag

China Daily (Hong Kong) - - BUSINESS - By ZHENG XIN in Beijing and WU YONG in Shengyang Con­tact the writ­ers at zhengxin@chi­nadaily.com.cn

Zhong­wang USA, an in­vest­ment firm backed by Chi­nese ty­coon Liu Zhong­tian, said on Tues­day that it would con­tinue to pur­sue over­seas business op­por­tu­ni­ties even as it called off its planned ac­qui­si­tion of US alu­minum maker Aleris Corp af­ter fail­ing to win US gov­ern­ment ap­proval.

“While this is not the out­come we in­tended, we re­main com­mit­ted to look­ing for in­vest­ment op­por­tu­ni­ties in the US as well as other over­seas mar­kets,” the com­pany told China Daily.

Though the deal will not pro­ceed, the com­pany still be­lieves that the co­op­er­a­tion could have been a win-win op­por­tu­nity for Amer­i­can work­ers and Zhong­wang USA, par­tic­u­larly in Ken­tucky, Ohio, Michi­gan, and Iowa, where Zhong­wang’s sub­stan­tial additional cap­i­tal in­vest­ment would have in­creased pro­duc­tiv­ity and Amer­i­can com­pet­i­tive­ness while sup­port­ing in ex­cess of 1,000 new jobs across four states, it said in a state­ment.

“Through the pro­posed ac­qui­si­tion, the com­pany was com­mit­ted to pre­serv­ing Amer­i­can jobs and in­vest­ing sub­stan­tial funds into Aleris,” the Chi­nese com­pany said.

An­a­lysts be­lieve that had the ter­mi­na­tion not oc­curred it would have led to China’s big­gest pur­chase of an over­seas met­als pro­ces­sor.

“The Aleris deal would have helped Zhong­wang to gain ex­po­sure to the US and European mar­kets,” said Zhu Yi, a Hong Kong-based an­a­lyst at Bloomberg In­tel­li­gence.

“We ex­pect Zhong­wang to look for other M&A op­por­tu­ni­ties, as the com­pany is look­ing to up­grade its prod­ucts and ex­pand into other re­gions.”

Zhong­wang an­nounced the ac­qui­si­tion of a ma­jor­ity stake in Sil­verYachts in Oc­to­ber, an Aus­tralia-based all-alu­minum su­per yacht builder, aim­ing to ex­pand alu­minum ap­pli­ca­tions in the high-end marine sec­tor.

It also an­nounced in Septem­ber the pur­chase of a con­trol­ling stake in a Ger­man alu­minum ex­tru­sion firm to add to its port­fo­lio of high-value-added au­to­mo­tive and aero­space prod­ucts and gain ex­po­sure to Europe and the US mar­ket.

Due to the alu­minum price re­bound this year, Chi­nese com­pa­nies are also less in­clined to ex­port prod­ucts.”

Zhu Yi,

Aleris agreed last Au­gust to be bought by Zhong­wang USA for $1.11 bil­lion in cash while the Trea­sury Depart­ment’s Com­mit­tee on For­eign In­vest­ment in the US con­tin­ued to raise na­tion­alse­cu­rity con­cerns with the merger.

The Aleris deal was among a num­ber of Chi­nese takeovers of US busi­nesses that have come un­der height­ened scru­tiny dur­ing the Trump ad­min­is­tra­tion.

“Trump’s trade prac­tices may re­duce in­bound ship­ments from China,” said Zhu.

“Due to the alu­minum price re­bound this year, Chi­nese com­pa­nies are also less in­clined to ex­port prod­ucts.”

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