HINDALCO INDUSTRIES LIMITED:

 
• Flagship company of Aditya Birla

Group(1958).

• Two Strategic businesses, annual revenue

US $14 billion.

• Largest integrated aluminium producer.

• Ranks among top quartile of low cost

producers in the world.
 Novelis - World’s leading producer of
aluminium-rolled products with a 19 per
cent global market share.
 World leader in the recycling of used
aluminium beverage cans.
 No.1 in rolled products producer in Europe,
South America and Asia.
 Facilities to produces metal cans for Pepsi
and Coke.
 In business or economics a merger is
a combination of two companies into
one larger company. Such actions are
commonly voluntary and involve stock
swap or cash payment to the target.
Stock swap is often used as it allows
the shareholders of the two companies
to share the risk involved in the deal.
● Horizontal Mergers
● Vertical Mergers
● Conglomerate Mergers
● Concentric Mergers
1. Horizontal Mergers
 Combination of two or more firms operating in
the same stage of production.
2. Vertical Mergers
 Combination of two firms that operate in
different stages of production.
- Textiles firm merges with raw materials firm.
3. Conglomerate Mergers
 Merger of firms in unrelated lines of business
that are neither competitors nor potential or
actual customers or suppliers of each other.
Example: General Electric buying
NBC television
4. Concentric Mergers
 Merger of two firms that are so related that
there is a carryover of specific management
functions (research, manufacturing, finance,
marketing, etc.)
Example: Pfizer and Wyeth merger
(Pharmaceutical giants came together
to share the R&D strengths)
 An acquisition, also known as a takeover or a
buyout, is the buying of one company (the
‘target’) by another.
 An acquisition may be friendly or hostile.
 In the former case, the companies cooperate in
negotiations; in the latter case, the takeover target
is unwilling to be bought or the target's board has
no prior knowledge of the offer.
 Acquisition usually refers to a purchase of a smaller
firm by a larger one.
INTRODUCTION:

• The series of acquisitions in metal industry

was initiated by acquisition of Arcelor by
Mittal followed by Corus by Tata’s.

• Indian aluminium giant Hindalco extended

this process by acquiring Atlanta based
company Novelis Inc, a world leader in
aluminium rolling and flat-rolled aluminium
products.
 Increased market power
 Learning and Developing new
capabilities
 Overcoming the new entrants into
the industry.
 Cost of new product development

 To avoid excessive competition

 All-cash transaction, US $6.0 billion, including
approximately US $2.4 billion of debt.

 Global integrated aluminium producer with low-

cost alumina and aluminium production facilities.

 Biggest rolled aluminium products maker and

fifth -largest integrated aluminium manufacturer
in the world.

 Globally positioned organization

-Tata steel buys Corus Plc : 12.1$ billion.

-Only $4.1 billion –Tatas ( balance as debt)

-Hindalco acquired novelis: 6$ billion.

-To buy the $3.6 billion worth of Novelis’s

equity, Hindalco borrowed almost $2.85 billion
(of the balance, $300 million is being raised as
debt from group companies and $450 million is
being mobilised from its cash reserves.
 Hindalco will be able to ship primary aluminium
from India and make value-added products.

 Hindalco metal is accepted under the high-grade

aluminium contract on the LME as a registered
brand.

 Hindalco’s rationale for the acquisition is

increasing scale of operation, entry into high—
end downstream market and enhancing global
presence(11 countries).
 Post acquisition, the company will get a strong global
footprint.

 The deal will give Hindalco a strong presence in recycling

of aluminium business.

  Novelis has a very strong technology for value added

products and its latest technology ‘Novelis Fusion’ is very
unique one.

 As per company details, the replacement value of the

Novelis is US $12 billion, so considering the time required
and replacement value; the deal is worth for Hindalco.
 To conclude the achievements in the
fiinancial year, the company recorded a
commendable performance in an
extremely difficult year that witnessed
unprecedented events in the financial
and commodity markets.
 This performance is because of the
underlying strength of business
operations & project management
capabilities.
 Annual report of Hindalco 2008-09
 www.hindalco.com
 www.adityabirla.com
 www.novelis.com/Internet/en-
US/AboutUs/History/