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GROUP 10

International Business HIMANSHU GAUTAM

(Term Paper) PARISH BURMAN

PRANAV MISHRA

SANDIIPAN DAS

SHIVANK SHARMA
GROWTH

Organic Inorganic
Organic

Asset New
New Market New Technology
Replication Customer
Inorganic

Takeover/Acquisition Joint Venture Strategic Alliance

Acquisition of Share Acquisition of Assets Mergers Proxy Contest Going Private


WHY M&A?

Diversification / sharpening business priority


Economies of scale
Strategic realignment and technological alternate
Increase in market share
Elimination of competition
Tax savings
IMPORTANT FACTS ABOUT THE DEAL

Novelis Valued at $ 6 Billion


Valuation All cash deal

Added 1 million tonnes primary aluminium capacity


Capacity Acquired Operations in 11 countries with 12500 employees

$ 2.8 Billion raised through Debt(UBS, ABN Amro and Bank of America)
Financing AV metals (SPV of Aditya Birla group) infused $3.5 Billion to finance this acquisition

The long term rating of AAA/Stable was revised to Rating Watch with Negative
Implications by CRISIL after the deal
Other facts Short term Implication: Increased coupon rate for bonds
FUNDING STRUCTURE

Tata-Corus Deal
Out of $12.1 B deal, Debt: equity
TATA effectively paid ratio = 7.43

Novelis-Hindalco Deal
$4.1billion Leveraged
Leveraged buyout as buyout was not
existing debt of Corus possible
was pretty low
STRATEGIC RATIONALE FOR ACQUISITION

Increasing scale of operation


it was estimated that it would take 10 years to achieve the capacity of 3 million that Novelis
had which included 29 plants

Entry into high end downstream market


Enhancing global footprint
Entry into 11 markets

Acquired Superior technology


Novelis Fusion : helped Hindalco in differentiating its product with respect to quality, ease of
production and economies of scale and scope