The European Commission suspended the deadline to clear the Novelis-Aleris acquisition deal Tuesday. The commission reportedly "stopped the clock" on its thorough probe into Novelis Inc's proposed acquisition of Aleris. The legislative procedure is activated when the concerned parties fail to furnish the information sought by the commission in time.
The Commission, which is the executive arm of the European Union, had earlier fixed August 8, 2019, as the target date to conclude its review of the proposed deal. The current development will delay the transaction between the two companies. Aditya Birla Group's Hindalco Industries Ltd's US subsidiary Novelis had last year announced that it would buy Aleris Corporation, one of the largest aluminium producing companies in the United States, for $2.6 billion.
"To comply with merger deadlines, parties must supply the necessary information for investigation in a timely fashion. Failure to do so will lead the Commission to stop the clock. Once the missing information is supplied by the parties, the clock is restarted, and the deadline for the Commission's decision is then adjusted accordingly," a European Commission spokesperson told the Business Standard.
The Commission on March 25 launched an in-depth probe in the proposed deal between Novelis and Aleris on account of its concern that this deal might cut the competition in the supply of various semi-finished aluminium products.
The Commission is of the view that the deal should not cause fewer choices and higher prices for European customers. The additional concern is that the proposed deal should not lessen competition in the supply of various semi-finished aluminium products.
According to a Hindalco spokesperson, the European Commission on May 13 had communicated its decision to Novelis to 'stop the clock' effective as of May 7 as it needed more time to "work through our case". The spokesperson also said "these time extensions in Phase 2 are routine, and the parties are working with the Commission to get the clock restarted as soon as possible."
The proposed acquisition will help the combined entity establish a more diverse product portfolio, ranging from high-end aerospace to beverage can and automotive to specialty products.
Since Novelis and Aleris are diversified across the world, they are required to take permission from the anti-trust authorities from all the key countries they have businesses in, which includes the US and China.