Hindalco Novelis Merger
GROUP PROJECT IN MERGER, ACQUISTION & CORPORATE RESTRUCTURING
“HINDALCO’S NOVELIS ACQUISITION”
Submitted By:
1) Rakesh Ranjan (PGEXP/2011/19)
2) Subash Ch. Das (PGEXP/2011/56)
3) Kumud Anand (PGEXP/2011/21)
4) Abinash Kumar Sahu (PGEXP/2011/26)
5) Anupam Sinha (PGEXP/2011/53)
6) Rajeev Kumar Gupta (PGEXP/2011/10)
← “If we earn $10 for every $100 of aluminum we sell, we will now be able to earn another $10 for every $100 worth of aluminum that Novelis processes into rolled products.”
--Debu Bhattacharya. MD
← "Acquisitions are not geography dependent. They depend on value-creation and will have to be in sync with existing businesses”
Kumar Mangalam Birla, 2007
1. Abstract
Last decade witnessed growing appetite for takeovers by Indian corporate across the globe as a part of their inorganic growth strategy. In this chain Indian aluminium giant Hindalco acquired Atlanta based company Novelis Inc, a world leader in aluminium rolling and flat-rolled aluminium products. Hindalco Industries Ltd., acquired Novelis Inc. to gain sheet mills that supply can makers and car companies. Strategically, the acquisition of Novelis takes Hindalco onto the global stage as the leader in downstream aluminium rolled products. The transaction makes Hindalco the world 's largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia, as well as being India 's leading copper producer.
The report attempts to analyze the financial and strategic implications of this acquisition for the shareholders of HINDALCO. In the first place the case explains the acquisition deal in detail and highlights the benefits of the deal for both the companies. Then the followings main issues are to be discussed for critical review of this case:
■ What is the strategic rationale for this acquisition?
■ Were the valuation for this acquisition was correct? Did Birlas overpay
“HINDALCO’S NOVELIS ACQUISITION”
Submitted By:
1) Rakesh Ranjan (PGEXP/2011/19)
2) Subash Ch. Das (PGEXP/2011/56)
3) Kumud Anand (PGEXP/2011/21)
4) Abinash Kumar Sahu (PGEXP/2011/26)
5) Anupam Sinha (PGEXP/2011/53)
6) Rajeev Kumar Gupta (PGEXP/2011/10)
← “If we earn $10 for every $100 of aluminum we sell, we will now be able to earn another $10 for every $100 worth of aluminum that Novelis processes into rolled products.”
--Debu Bhattacharya. MD
← "Acquisitions are not geography dependent. They depend on value-creation and will have to be in sync with existing businesses”
Kumar Mangalam Birla, 2007
1. Abstract
Last decade witnessed growing appetite for takeovers by Indian corporate across the globe as a part of their inorganic growth strategy. In this chain Indian aluminium giant Hindalco acquired Atlanta based company Novelis Inc, a world leader in aluminium rolling and flat-rolled aluminium products. Hindalco Industries Ltd., acquired Novelis Inc. to gain sheet mills that supply can makers and car companies. Strategically, the acquisition of Novelis takes Hindalco onto the global stage as the leader in downstream aluminium rolled products. The transaction makes Hindalco the world 's largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia, as well as being India 's leading copper producer.
The report attempts to analyze the financial and strategic implications of this acquisition for the shareholders of HINDALCO. In the first place the case explains the acquisition deal in detail and highlights the benefits of the deal for both the companies. Then the followings main issues are to be discussed for critical review of this case:
■ What is the strategic rationale for this acquisition?
■ Were the valuation for this acquisition was correct? Did Birlas overpay
References: 1] Surojit Chatterjee, "Birla 's Hindalco Buys Aluminium Giant Novelis for US $6.4 billion," http://in.ibtimes.com, February 13, 2007. 2] Heather Timmons, "Indian Metals Company to Buy Canadian Rival," www.iht.com, February 11, 2007. 3] Suresh P Iyengar, "Hindalco Deal May Not Impact Aluminium Prices," The Hindu Business Line, February 13, 2007. 4] Anand, M, “Hindalco-Novelis: The (Scary) Untold Story”, Business World, February 26, 2007. Securities, Feb 14, 2007 9] Mehta, Chintan, Hindalco Industries Ltd, Asit C Mehta Intermediates, Dec 31, 2007