Hindalco acquires Novelis for $6-billion

12 February 2007

After the Tata Group's winning bid for Corus, now the Aditya Birla Group has imprinted the Indian stamp on the global metals market by expanding its global base through a large overseas acquisition.

Aluminium and copper major Hindalco Industries, the Aditya Birla Group flagship, would acquire Canadian company Novelis Inc in an all-cash deal.

The acquisition would make Hindalco the global leader in aluminium rolled products and one of the largest aluminium producers in Asia. With post-acquisition combined revenues in excess of $10 billion, Hindalco would enter the Fortune-500 listing of world's largest companies by sales revenues.

Though there were some isolated reports in the domestic media about the possibility of such a deal, there was no frenzied reporting of the kind witnessed by the highly public battle between Tata Steel and Brazilian company CSN for European steelmaker Corus.

Novelis had announced recently that it was in discussions with various parties which could lead to a possible sale of the company. Though it was speculated that Hindalco was one of the potential buyers, the company's chances were considered slim.

Hindalco and Novelis have signed a definitive agreement for the acquisition, which values Novelis at around $6 billion. After excluding the $2.4 billion of debt, the equity component of the deal works out to $3.6 billion. Novelis shareholders would receive $44.93 per share in cash. This is a substantial value appreciation for Novelis shareholders as the stock has more than doubled in recent weeks, after the company confirmed the possible sale.