Buy the discounted debt of a struggling company that is similar to one you own; take over the firm when it goes bankrupt and fold into your business; repeat.

The novel strategy of Leon Black’s Apollo is becoming a pattern, and may help some of Apollo’s businesses survive the downturn.

For example, in 2006, private-equity firm Texas Pacific bought aluminum roller Aleris in a $3.3 billion leveraged buyout by having Aleris borrow most of the money to finance the deal. Apollo later bought discounted debt in Aleris. Stuck with $2.5 billion in debt, Aleris last February filed for bankruptcy.

Now Apollo and two other firms plan to put $690 million into the company and this summer take ownership when Aleris emerges from bankruptcy.

Apollo owns the similar Noranda Aluminum, and likely will combine the two businesses, a source close to the situation said.

Noranda is expected to have a debt-to-Ebitda ratio of 4:1 by the end of 2010, making it a below-investment grade-company. Combining Noranda with Aleris would lead to cost savings, and make it easier for Apollo to take Noranda public.

The firm pulled this strategy off for the first time in December, when Berry Plastics, which it co-owns, bought Pliant, which Apollo took over through a loan position.

“What Apollo is doing is no different than industrial companies,” said a source. Still, while conglomerates buy and sell companies, they are not using a loan-to-own strategy to fill out their empires.

An Apollo-led creditor group is seeking to buy bankrupt chemical company LyondellBasell Industries, which is restructuring $20 billion in debt. Apollo could combine it with one of its chemical firms, like Hexion. Apollo declined comment.