News: Now, AV Birla wants to buy aluminium multinational

(DNA 28/01/2007) Mumbai - It’s now the turn of the Aditya Birla Group, the fourth-largest business group in the country, to make a multi-billion dollar bid.

Its flagship company and the country’s leading aluminium-maker Hindalco is eyeing Novelis Inc, an aluminium-maker having operations spread across America, Europe and Asia.

Novelis, which was spun out of Canadian aluminium giant Alcan, has a turnover of $8.4 billion (Rs 38,262 crore). Investment banking circles are still not sure whether Hindalco will bid for Novelis lock, stock and barrel or whether it will seek parts of the company.

Novelis shares gained $7.17, at $37.70, a gain of 23.80%, before trading was halted in the counter.

A senior Hindalco official told DNA, “It is speculative, uncorroborated and hence we would not like to comment on it.” Sources also reveal that the Indian company is eyeing a smelter owned by Norwegian aluminium giant Norsk Hydro. Novelis’ performance on the US bourses on Friday was spectacular. But ever since its demerger from Alcan, the company has been making losses.

It has no recourse to captive mines and perhaps Hindalco fits into their scheme as it owns vast resources of bauxite and alumina. Novelis is slated to carry a huge debt in its books and depends on the markets to buy alumina and other raw materials. With the ore getting costlier, Novelis has had to pay a heavy price to sustain its business. Novelis is also the largest recycler of aluminium cans in the world. If the bid is for the whole business, it would cost Hindalco at least $5-6 billion, investment banking sources said.