According to a spokesperson from Aleris, the acquisition deal between China Zhongwang and Cleveland’s Aleris Corporation has not been called off by any side. According to a report published in Blloomberg on Friday, the merger agreement between both the companies has been extended to the middle of September. The initial agreement, announced at the end of August 2016, was scheduled to expire Aug. 31.
“We remain in discussions with Zhongwang USA on the pending acquisition,” said Jason Saragian, an Aleris spokesman to Bloomberg News via email.
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If the transaction takes place, it would be the biggest-ever acquisition by a Chinese company of an overseas metals processor. The transaction faced regulatory hurdles in the U.S. as U.S. officials raised concerns over national-security. Recently, there has been strict scrutiny over takeovers of American companies by Chinese buyers.
After the initial hurdles, both Aleris and Zhongwang USA withdrew a notice seeking approval of the transaction from the Treasury Department’s Committee on Foreign Investment in the U.S. Aleris said in the filling that there can be “no assurance” on the approval of the deal leaving the deal in a jeopardy. So, the agreement is yet to be given approval from the Committee on Foreign Investment in the United States (CFIUS), a government body that reviews and approves foreign investments in domestic firms. The two companies again withdrew their notice with CFIUS, saying that negotiations over the sale would continue.
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Other than the oppositions from U.S. officials, recent policy developments such as duties on aluminium foil and a possible ruling against China in Section 232 investigation by Trump administration are also making the deal closure more challenging.
As Indian billionaire and chairman of Aditya Birla Group, Kumar Mangalam Birla is believed to be considering bidding for Aleris and Constellium, this makes the status of the transaction look more exciting. Aditya Birla Group’s subsidiary Hindalco Industries already owns Atlanta rolled aluminium producer Novelis.
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