Novelis sells 50% stake in S Korea arm for $315 mn
Plans to use funds to form a joint venture with Japan’s Kobe Steel
US-based Novelis on Wednesday announced that it had sold off 50 per cent of its stake in the Ulsan facility in South Korea for $315 million to form a joint venture with Japan’s Kobe Steel, a producer of aluminium rolled products. The joint venture would be named Ulsan Aluminum.
US-based Novelis on Wednesday announced that it had sold off 50 per cent of its stake in the Ulsan facility in South Korea for $315 million to form a joint venture with Japan’s Kobe Steel, a producer of aluminium rolled products.
The joint venture (JV), to be named Ulsan Aluminum, will have each company remaining responsible for its metal supply and commercial relationships, Novelis said in a release. The JV transaction is expected to close in September 2017, subject to customary closing conditions, it added.
Novelis is a wholly-owned subsidiary of Aditya Birla Group’s flagship company Hindalco Industries.
By entering into this joint venture, Novelis will better utilise its rolling capacity at Ulsan, which will continue to focus on automotive and specialty sheet to meet the increasing demand for lightweight rolled aluminum products across Asia, said the release.
Partnering with “another world-class manufacturing company” will allow Novelis to drive operational efficiencies and process enhancements. 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 release said.
The transaction will generate cash proceeds to enhance Novelis’ strategic flexibility and reduce its net debt.
“As a company, 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,” the release said quoting Steve Fisher, president and chief executive officer, Novelis, as saying.
“By entering into this joint venture, we are able to leverage our deep experience with other successful joint ventures to more efficiently serve our customers and increase our strategic flexibility in order to capitalise on potential future market opportunities,” he added.
Located in the industrial hub of Korea, Novelis’ Ulsan facility employs about 600 people and currently focuses on the production of rolled aluminum sheet for a variety of markets in Asia. The plant recently completed a major expansion, adding a new three-stand hot finishing mill as well as a pusher furnace and annealing furnaces.