U.S. Senators Look to Block Purchase of Cleveland-based Aleris by Chinese Company

CLEVELAND, OH - A group of 12 senators, including Ohio's Rob Portman, have sent a letter to President Barack Obama and Treasury Secretary Jack Lew urging the Committee on Foreign Investment in the United States to reject the purchase of Cleveland-based Aleris by China-based Zhongwang International Group. The letter was spearheaded by Senate Finance Committee Ranking Member Ron Wyden, D-Ore.

The acquistion of Aleris by Zhongwang was announced in late August 2016. The aggregate value of Aleris amounts to $2.33 billion, comprising $1.11 billion in cash for the equity to be paid by Zhongwang USA, plus $1.22 billion in net debt. The transaction was expected to close in the first quarter of 2017 following regulatory approvals and closing conditions.

According to a press release from the company, the Aleris management team would remain in place and the company would continue to be based out of Cleveland.

The senators wrote that the proposed purchase would undermine U.S. national security by risking transfer of sensitive technologies and impair U.S. capacity to produce advanced aluminum products, including defense-grade armor, aerospace and other applications. c

“Zhongwang’s purchase of Aleris would directly undermine our national security, including by jeopardizing the U.S. manufacturing base for sensitive technologies in an industry already devastated by the effects of China’s market distorting policies, and creating serious risk that sensitive technologies and know how will be transferred to China, further imperiling U.S. defense interests,” the senators wrote.

The senators also noted that Zhongwang is currently under investigation by the Department of Commerce for shirking its US import duties.

United Steelworkers International President Leo Gerard also voiced concerned about the purchase: “The purchase of Aleris by Zhongwang USA, LLC, held by China Zhongwang Holdings Limited, a Chinese company known for its evasion of US trade laws has raised great concern among USW’s leadership and our members working in the aluminum sector. Aleris’ assets are critical to not only our national security, but our domestic infrastructure and we are pleased to have these 12 Senators led by Senator Wyden sharing our concerns,” Gerard said.

"This acquisition is an international expansion to establish a complementary business foothold, as I strongly believe in the potential and prospects of Aleris and the aluminum industry as a whole," said Liu Zhongtian, founder of China Zhongwang Holdings.

Senators Chuck Schumer, D-N.Y., Bob Casey, D-Penn., Joe Manchin, D-W.V., Kirsten Gillibrand, D-N.Y., Joe Donnelly, D-Ind., Rob Portman, R-Ohio, Debbie Stabenow, D-Mich., Jeff Merkley, D-Ore., Amy Klobuchar, D-Minn., Tammy Baldwin, D-Wisc., and Al Frankin, D-Minn., also signed the letter to Treasury Secretary Jack Lew.

You can read the full letter here.

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