Chinese-owned Zhongwang USA to buy aluminum products maker Aleris

(Reuters) - Zhongwang USA LLC, a division of China's Zhongwang International Group Ltd., said on Monday it would buy U.S.-based aluminum rolled products maker Aleris Corp from a fund group in a $2.33 billion deal.

Zhongwang International is also the parent of China Zhongwang Holdings Ltd, the world's second-largest producer of aluminum extrusions.

Cleveland-based Aleris supplies fabricated products to the aerospace, construction, automotive and defense industries. It has plants in the United States, Europe and Asia.

Zhongwang USA, which is majority-owned by Liu Zhongtian, the founder of China Zhongwang, will pay $1.11 billion in cash and take on Aleris's $1.22 billion in net debt, Aleris said in a statement.

The deal boosts Zhongwang's exposure to the growing automotive sector, seen as a burgeoning source of demand for the aluminum industry as some carmakers transition toward aluminum, which is lighter than steel.

In a statement, Liu said Aleris was "well-positioned to capitalize on the positive demand trends we see globally," citing the company's ongoing expansion of an automotive plant in Lewisport, Kentucky.

Aleris has been owned by a group of funds including Oaktree Capital Management LP and Apollo Management LP since it emerged from bankruptcy in 2010.

China Zhongwang - the subsidiary that is not the purchaser of Aleris - is the subject of an ongoing investigation by the U.S. Department of Commerce (DOC) into allegations from the U.S. Aluminum Extruders Council (AEC) that the company evaded U.S. import tariffs on aluminum extrusions.

China Zhongwang denied the allegations

In March, the Department of Commerce said it would investigate whether the company had circumvented antidumping and countervailing duties on aluminum extrusions from China, which were introduced in 2011 in a victory for U.S. extruders, who argued Chinese exports were unfairly subsidized.

Extrusion is the process of shaping aluminum by forcing it to flow through an opening in a die.

Zhongwang USA LLC is not owned by China Zhongwang, but the two are related through Zhongwang International and Liu.

Last year, short-seller Dupre Analytics accused China Zhongwang of doctoring its books, in a report cited widely in the AEC's complaint. The company denied those allegations.

Aleris President and Chief Executive Sean Stack said the deal would help it "expand our capabilities" in production of materials for the automotive and aerospace markets.

The deal is expected to close in the first quarter of 2017.

Credit Suisse was financial adviser to Aleris, while Moelis & Co advised Aleris on certain aspects of the deal.

(Reporting by Luc Cohen in New York, Ankit Ajmera in Bengaluru and Josephine Mason in Beijing; Editing by Saumyadeb Chakrabarty and Paul Simao)