Novelis Inc. reaffirmed its full commitment to closing its proposed acquisition of Aleris Corp., a global supplier of rolled aluminum products, notwithstanding the U.S. Department of Justice (DOJ) lawsuit to block the transaction. Atlanta, Ga.-based Novelis intends to vigorously defend against the DOJ's challenge, which it believes is without merit. Novelis announced in July 2018 that it signed a definitive agreement to acquire Cleveland, Ohio-based Aleris for approximately $2.6 billion.
The DOJ lawsuit is based on the contention that the only relevant competition among automotive body sheet providers is that among aluminum manufacturers such as Novelis and Aleris. It ignores competition from steel automotive body sheet, even though steel automotive body sheet is currently used for nearly 90% of the market.
To prevail in its lawsuit, the DOJ will need to prove that there is a distinct "relevant market" for aluminum automotive body sheet, which means that steel automotive body sheet does not significantly constrain the price and quality of aluminum automotive body sheet. Novelis believes that, by focusing on just a small slice of steel-aluminum competition and ignoring the broader competitive process, the DOJ's theory contravenes well-established principles of market definition.