HINDALCO SNAPS UP INDAL
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Mumbai | Published 23.03.00, 12:00 AM|
Mumbai, March 23 : Hindalco Industries today announced it plans to acquire Indian Aluminium Company (Indal) from Alcan Aluminium (Alcan) for Rs 738 crore in the largest-ever cash buyout by an Indian company. The Aditya Birla group firm will acquire the 54.6 per cent stake that Alcan holds in Indal and then make a mandatory open offer that could eventually raise its holding in the company to 74 per cent. The total acquisition could cost it Rs 1008.2 crore. The 54.6 per cent stake, comprising 38.84 million shares, will be purchased at a price of Rs 190 per share. The open offer for an additional 20 per cent stake, involving 14.22 million shares also at Rs 190 per share, will cost Hindalco Rs 270 crore. Alcan's divestment in Indal - after having fended off a hostile takeover bid by Sterlite - surprised the industry, which had only begun to digest the implications of an August 1999 global merger between Alcan, the US-based AlusuisseLonza (Algroup) and Pechiney of France to form a $ 25 billion monolith. Not surprisingly, Sterlite Industries was one of the suitors for the stake even though Alcan representative T M Tracy said confidentiality clauses prevented him from revealing the details of bidders. The industry is also amazed that the entire Rs 1008.20-crore deal will be sealed with liquid funds and internal surpluses at the disposal of Hindalco. Alcan executive president Brian Sturgell said his company's focus had now shifted to fortfying its upstream aluminium position, and on serving advanced flat-rolled products. The terms of the agreement include a non-compete commitment from Alcan for three years, with a provision to extend it by two years. While DSP Merrill Lynch advised Hindalco on the deal, Alcan consulted JM Morgan Stanley. The acquisition will give the A V Birla firm a foothold in Utkal Alumina - the $ 1 billion private greenfield project in Orissa. Officials say Hindalco will pick up Alcan's 35 per cent stake in the project if the Canadian major divests even a part of its holding in the project. Indal holds 20 per cent in Utkal Alumina while Norsk Hydro controls 45 per cent. 'We will become a vertically integrated player with a leading positions in alumina production to foil-making. The acquisition will enhance the value for Hindalco's shareholders. Aluminium has been one of the core businesses for the group, and has an enormous growth potential. Indal's strengths in downstream products will complement Hindalco's strong presence in metal processing,' Aditya Birla Group chairman Kumar Mangalam Birla said. 'The buyout will strengthen Hindalco's position in a rapidly consolidating global market. Together with our brownfield expansion, it will help Hindalco meet the emerging challenges in the domestic market more effectively,' Birla said. The gains of this buyout to Hindalco will flow in the areas of product rationalisation, production planning and proximity to key markets, Hindalco president A K Agarwala said. Meanwhile, investors seemed to relish the announcement of the deal with the Indal scrip racing to Rs 129.60 on the Calcutta Stock Exchange at the close compared with Rs 120 on Wednesday. Tracy said his company's interest in the country remains unchanged. At the same time, both Alcan and Hindalco indicated they may pick up stakes in Balco and Nalco when the government divests its holding in these PSU firms.