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The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Evergreen Holding Germany GmbH and Real Alloy UK Holdco Ltd (‘Real Alloy Europe') by KPS Special Situations Fund V, a fund managed by KPS Capital Partners, LP (‘KPS') through its subsidiary Speira BidCo I GmbH (‘Speira'). The approval is conditional on full compliance with commitments offered by KPS.

Executive Vice-President Margrethe Vestager, in charge of competition policy, yesterday said:

“Access to recycled aluminium is important to achieve the objectives of the circular economy and green transition. We had concerns that the combined entity could foreclose critical input for producers of aluminium flat rolled products. These are necessary for the manufacturing of daily products, like beverage cans. KPS offered to divest a stand-alone business which consists of two plants and this addresses our competition concerns.”

KPS is an investment fund controlling manufacturing companies across multiple industries. KPS's subsidiary Speira produces recycled aluminium and manufactures flat rolled aluminium products. Real Alloy Europe manufactures and supplies recycled aluminium. It also provides recycling services to third parties for (hazardous) by-products from the aluminium recycling process, such as dross and salt slag.

The Commission's investigation

The Commission's investigation showed that following the transaction, the parties could restrict access to recycled aluminium as well as dross and salt slag recycling services.

Real Alloy Europe has a significant market position in those markets, there are only a few alternative suppliers, and competitors of Speira for flat rolled products rely on those inputs currently provided by Real Alloy. The recycling of these products is critical for the production of recycled aluminium. The recycling allows extracting their aluminium content and other components. At the same time, hazardous waste needs to be recycled as it is subject to stringent regulations in relation to storage and recycling requirements.

Following the transaction, the parties would have the incentive and ability to restrict the competitors' access to necessary products and services in the aluminium recycling chain. In turn, this could lead to higher prices for aluminium flat rolled products used to manufacture beverage cans.  

The proposed remedies

To address the Commission's competition concerns, KPS offered to divest Real Alloy's recycled aluminium production and dross recycling facility in Swansea (UK) as well as Real Alloy's salt slag recycling plant in Sainte-Menehould (France).

The commitments include the structural divestiture of a stand-alone business consisting of two plants, which have sufficient capacity and ability to continue providing services and supplying competitors for aluminium flat rolled products. The Commission will closely monitor the divestment process, including the choice of a suitable purchaser for the divested business that will have to be approved by the Commission.

Following the market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.

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