Novelis to sell two China subsidiaries for $265 million

U.S.-based aluminum producer Novelis has agreed to sell two wholly owned subsidiaries in China for approximately $265 million, as it seeks to reduce its operations in the country. The transaction, involving the sale to Shenzhen Hongzhi Industrial Investment Co. or its affiliates, was disclosed in a stock exchange filing by Hindalco Industries, the parent company of Novelis.

The agreement includes a potential extra payment of $10 million, contingent upon the fulfillment of certain conditions. Signed on November 14, the deal is set to close within 12 months, pending regulatory approvals and other customary requirements. In the financial year ending March 2026, the subsidiaries generated about $376 million in net sales, representing roughly 1% of Hindalco's consolidated net sales.

This divestiture represents a reduction in Novelis' manufacturing exposure in China, where foreign industrial companies face increasing competition from domestic producers and evolving global supply chains. Novelis, one of the world's largest producers of flat-rolled aluminum products, serves customers in various sectors, including automotive, beverage packaging, and aerospace.

The sale reflects broader industry trends as manufacturers reconsider their geographic operations amidst shifting trade dynamics, regional competition, and efforts to optimize production networks. Hindalco, an integral part of the Indian conglomerate Aditya Birla Group, led by billionaire Kumar Mangalam Birla, remains subject to regulatory clearance.

The final consideration could potentially reach approximately $275 million, contingent on the satisfaction of earn-out conditions. The filing did not disclose the specific conditions tied to the additional payment nor provide additional details on the operational plans for the sold subsidiaries post-sale.