23737281 Hindalco Acquisition Ppt

8/3/2019 23737281 Hindalco Acquisition Ppt

1/17


2/17

HINDALCO INDUSTRIES LIMITED:

Flagship company of Aditya BirlaGroup(1958).

Two Strategic businesses, annual revenueUS $14 billion.

Largest integrated aluminium producer.

Ranks among top quartile of low costproducers in the world.


3/17

Novelis - Worlds leading producer ofaluminium-rolled products with a 19 percent global market share.

World leader in the recycling of usedaluminium beverage cans.

No.1 in rolled products producer in Europe,South America and Asia.

Facilities to produces metal cans for Pepsiand Coke.


4/17

In business or economics a merger isa combination of two companies into

one larger company. Such actions arecommonly voluntary and involve stockswap or cash payment to the target.Stock swap is often used as it allowsthe shareholders of the two companiesto share the risk involved in the deal.


5/17

Horizontal Mergers

Vertical Mergers

Conglomerate Mergers

Concentric Mergers


6/17

1. Horizontal Mergers

Combination of two or more firms operating inthe 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 businessthat are neither competitors nor potential oractual customers or suppliers of each other.

Example: General Electric buying

NBC television


7/17

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)


8/17

Anacquisition, also known as a takeover or abuyout, is the buying of one company (the

target) by another. An acquisition may be friendly or hostile.

In the former case, the companies cooperate innegotiations; in the latter case, the takeover target

is unwilling to be bought or the target's board hasno prior knowledge of the offer.

Acquisition usually refers to a purchase of a smallerfirm by a larger one.


9/17

INTRODUCTION:

The series of acquisitions in metal industrywas initiated by acquisition of Arcelor byMittal followed by Corus by Tatas.

Indian aluminium giant Hindalco extendedthis process by acquiring Atlanta based

company Novelis Inc, a world leader inaluminium rolling and flat-rolled aluminiumproducts.


10/17

Increased market power Learning and Developing new

capabilities

Overcoming the new entrants intothe industry.

Cost of new product development

To avoid excessive competition


11/17

All-cash transaction, US $6.0 billion, includingapproximately US $2.4 billion of debt.

Global integrated aluminium producer with low-

cost alumina and aluminium production facilities.

Biggest rolled aluminium products maker andfifth -largest integrated aluminium manufacturer

in the world.

Globally positioned organization


12/17

-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 Novelissequity, Hindalco borrowed almost $2.85 billion(of the balance, $300 million is being raised asdebt from group companies and $450 million isbeing mobilised from its cash reserves.


13/17

Hindalco will be able to ship primary aluminiumfrom India and make value-added products.

Hindalco metal is accepted under the high-gradealuminium contract on the LME as a registeredbrand.

Hindalcos rationale for the acquisition isincreasing scale of operation, entry into highend downstream market and enhancing globalpresence(11 countries).


14/17

Post acquisition, the company will get a strong globalfootprint.

The deal will give Hindalco a strong presence in recyclingof aluminium business.

Novelis has a very strong technology for value addedproducts and its latest technology Novelis Fusion is veryunique one.

As per company details, the replacement value of theNovelis is US $12 billion, so considering the time requiredand replacement value; the deal is worth for Hindalco.


15/17

To conclude the achievements in thefiinancial year, the company recorded acommendable performance in anextremely difficult year that witnessedunprecedented events in the financialand commodity markets.

This performance is because of theunderlying strength of business

operations & project managementcapabilities.


16/17

Annual report of Hindalco 2008-09

www.hindalco.com

www.adityabirla.com

www.novelis.com/Internet/en-US/AboutUs/History/
http://www.hindalco.com/http://www.adityabirla.com/http://www.adityabirla.com/http://www.hindalco.com/


17/17

23737281 Hindalco Acquisition Ppt

Documents