Posted on 02/11/2007 4:35:08 PM PST by samsonite
MUMBAI: Kumar Mangalam Birla’s Hindalco Industries has offered to pay up to $6 billion for Novelis Inc, a Canadian aluminium sheet manufacturer. At $44.93 per Novelis share, the company’s board of directors have recommended to its shareholders that they accept the Birla offer.
If the bid is accepted, this will be the largest acquisition by any Indian company in North America. Overall, this will be the second largest acquisition after Tata Steel, which brought Corus out for $12 billion. It will also propel Hindalco into the list of Fortune 500 companies.
Subsequent to the acquisition, Hindalco will be the 5th largest aluminium company in the world. Currently, it is ranked at 13. It will also be the world’s largest flat rolled product company.
According to the terms of the agreement, if a fresh bidder intends to take a shot at acquiring Novelis, it will first have to pay Hindalco $100 million. Following this, it will have to make an offer at least $3 to $4 over what Hindalco has offered.
Hindalco with a market capitalisation of Rs 20,094 crore ranks 34th on the Indian stock markets. With Novelis in its fold, its market cap will go up to Rs 40,426 crore, making it the 18th most valued company in India.
Novelis currently has a turnover of $8.4 billion. Coupled with Hindalco’s turnover of close to $2.5 billion, the combined entity will have a turnover of approximately $11 billion.
So it begins....
so WHAT begins?
That is strangest comment I read today......What do you really mean?
Globalization pundits have long been warning of a reverse tide - of wealth, tech, assets and ownership following population patterns. In other words, the era of asia as an economic powerhouise is among us. And precisely at a time when the old elite - the west and Japan - are ageing and slowing down.
Expect more buyouts, takeovers, bold moves etc from the emerging titans and tycoons in Asia, specifically India.
There've already been a few of v high profile Indian buyouts of big European firms (all ignored by the US media, btw). The steady influx of capital, the falling dollar etc have now reached a point where the buyout trend has finally reached N American shores. So it begins....
I have an idea what it means, but it requires an intellectual-downshift and I don't think the clutch can bear it.
bump
You do realize what's going on here -- if this deal goes through, $6 billion will be transferred from India to Canada.
Somehow this is supposed to be bad... for North Americans?
That is a valid point. But there's a lot more than $6 billion going the other way, in terms of immeasurable quantities and qualities.
I think it's good both ways.
That will keep more jobs in Canada and probably will result in more investment in that specific industry to make it more profitable.
I think the shareholders would disagree with that assessment, otherwise they would have charged more than $6 billion.
Form 10-Q 11/14/2006 (interesting excerpts)
...
SPIN-OFF FROM ALCAN
On May 18, 2004, Alcan announced its intention to transfer its rolled products businesses into a separate company and to pursue a spin-off of that company to its shareholders. The rolled products businesses were managed under two separate operating segments within Alcan — Rolled Products Americas and Asia; and Rolled Products Europe. On January 6, 2005, Alcan and its subsidiaries contributed and transferred to Novelis substantially all of the aluminum rolled products businesses operated by Alcan, together with some of Alcan’s alumina and primary metal-related businesses in Brazil, which are fully integrated with the rolled products operations there, as well as four rolling facilities in Europe whose end-use markets and customers were similar to ours.
...
Organization and Description of Business
Novelis Inc., formed in Canada on September 21, 2004, and its subsidiaries, is the world’s leading aluminum rolled products producer based on shipment volume. We produce aluminum sheet and light gauge products where the end-use destination of the products includes the construction and industrial, beverage and food cans, foil products and transportation markets. As of September 30, 2006, we had operations on four continents: North America; Europe; Asia and South America, through 34 operating plants and three research facilities in 11 countries. In addition to aluminum rolled products plants, our South American businesses include bauxite mining, alumina refining, primary aluminum smelting and power generation facilities that are integrated with our rolling plants in Brazil.
...
We had net sales of $2.5 billion and a net loss of $102 million, or $(1.38) per share for our quarter ended September 30, 2006, compared to net sales of $2.1 billion and net income of $10 million, or $0.14 per share for the third quarter of 2005. We had net sales of $7.4 billion and a net loss of $170 million, or $(2.30) per share for the nine months ended September 30, 2006, compared to net sales of $6.3 billion and net income of $32 million, or $0.43 per share for the nine months ended September 30, 2005.
...
Environmental Matters
Oswego North Ponds. Oswego North Ponds is currently our largest known single environmental loss contingency. In the late 1960s and early 1970s, Novelis Corporation (a wholly-owned subsidiary of ours and formerly known as Alcan Aluminum Corporation, or Alcancorp) in Oswego, New York used an oil containing polychlorinated biphenyls (PCBs) in its re-melt operations. At the time, Novelis Corporation utilized a once-through cooling water system that discharged through a series of constructed ponds and wetlands, collectively referred to as the North Ponds. In the early 1980s, low levels of PCBs were detected in the cooling water system discharge and Novelis Corporation performed several subsequent investigations. The PCB-containing hydraulic oil, Pydraul, which was eliminated from use by Novelis Corporation in the early 1970s, was identified as the source of contamination. In the mid-1980s, the Oswego North Ponds site was classified as an “inactive hazardous waste disposal site” and added to the New York State Registry. Novelis Corporation ceased discharge through the North Ponds in mid-2002.
No, no! I meant the intangible benefits, technologies, management skills, etc.,
Shareholders can't put a price on these...
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