Hindalco to Buy Novelis for $6 Billion, Add Products

Jan. 26 (Bloomberg) -- Novelis Inc., the aluminum-sheet maker spun off from Alcan Inc., said it is in talks that may lead to the sale of the company. Novelis's stock surged 24 percent to a record, and the shares of rivals climbed.


The disclosure followed a report that Kumar Mangalam Birla's Aditya Birla Group might make an offer soon. Novelis, based in Atlanta, said today in a statement that negotiations with ``various parties'' may lead to a sale. Still, ``there can be no assurance that any transaction will occur,'' the company said.


The Hindustan Times reported on its Web site today Aditya Birla Group, based in Mumbai, may make a bid valued at $5 billion to $6 billion, citing people the newspaper didn't name. Novelis, which makes sheet used in cars and construction, had a loss of $170 million in the nine months ended September.


``Novelis's recent results have not been too impressive, and the company is loaded with debt,'' said Ben Butwin, a metals analyst at MorningStar Inc. in Chicago. ``If this is indeed the price, we would expect shareholders and the company to sell.''


The Aditya Birla Group has interests in telecommunications, cement, metals, textiles and financial services. Billionaire Kumar Mangalam Birla is the chairman of Hindalco Industries Ltd., India's biggest aluminum producer.



`Speculative Story'

Pragnya Ram, a spokeswoman for Hindalco, said in a telephone interview from Mumbai that the company didn't want to comment on ``any spculative story.'' Novelis spokesman Charles Belbin declined to comment.


Novelis, which was spun off in 2005, rose C$8.40 to C$44.05 on the Toronto Stock Exchange. Today's percentage gain was a record. The shares have almost doubled in the past 12 months.


Novelis's market value, even after today's gains, is about C$3.26 billion ($2.76 billion.) Novelis has about $3.2 billion in debt and loans outstanding, according to data compiled by Bloomberg.


``We still believe that the shares are fundamentally overvalued but may well have strategic value to an overseas investor'' said Victor Lazarovici, an analyst at BMO Capital Markets in New York. He rates the shares ``underperform.''


Other aluminum companies soared on takeover speculation. Century Aluminum Co., the second-largest U.S. producer of the metal, gained $1.53, or 3.6 percent, to $44.57 on the Nasdaq Stock Market. Kaiser Aluminum Corp. gained $1.37, or 2.2 percent, to $63.94.


Alcoa Inc., the world's largest aluminum producer, rose 60 cents, or 1.9 percent, to $32.07 in New York Stock Exchange composite trading. Alcan Inc, the second-biggest, gained 70 cents, or 1.2 percent, to C$58.19 in Toronto.


Management Changes

Edward A. Blechschmidt has been acting chief executive officer at Novelis since Jan. 2. The company had been searching for a permanent replacement since ousting Brian W. Sturgell in August after a jump in metal prices led to losses.


Blechschmidt, a board member, succeeded Chairman William T. Monahan, who had been interim CEO since the ouster of Sturgell, an executive vice president at Alcan when he was named in 2004 as Novelis CEO.


Alcan spun off Novelis to satisfy antitrust concerns after acquiring France's Pechiney SA for about $4 billion euros in Feb. 2004. In January 2005, Novelis agreed to sell about $1.4 billion in bonds as part of a $2.9 billion refinancing needed to repay loans from Alcan.



 

simplynikki

New member
thnkx buddy ..for all the useful tread ...
can u plz but on some more data .relating the financial details n ater effect of this deal ...
 
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