HINDALCO INDUSTRIES LIMITED: Flagship company of Aditya Birla Group(1958).

Two Strategic businesses, annual revenue US $14 billion. Largest integrated aluminium producer. Ranks among top quartile of low cost producers in the world.

Novelis - Worlds leading producer of aluminium-rolled products with a 19 per cent global market share. World leader in the recycling of used aluminium beverage cans. No.1 in rolled products producer in Europe, South America and Asia. Facilities to produces metal cans for Pepsi and Coke.

In business or economics a merger is a combination of two companies into one larger company. Such actions are commonly voluntary and involve stock swap or cash payment to the target. Stock swap is often used as it allows the shareholders of the two companies to share the risk involved in the deal.

Horizontal Mergers Vertical Mergers Conglomerate Mergers Concentric Mergers

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Horizontal Mergers Combination of two or more firms operating in the same stage of production. Vertical Mergers Combination of two firms that operate in different stages of production. - Textiles firm merges with raw materials firm. Conglomerate Mergers Merger of firms in unrelated lines of business that are neither competitors nor potential or actual customers or suppliers of each other.

Example: General Electric buying NBC television

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)

An acquisition, also known as a takeover or a buyout, is the buying of one company (the target) by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one.

INTRODUCTION:

The series of acquisitions in metal industry was initiated by acquisition of Arcelor by Mittal followed by Corus by Tatas.

Indian aluminium giant Hindalco extended this process by acquiring Atlanta based company Novelis Inc, a world leader in aluminium rolling and flat-rolled aluminium products.

Increased market power Learning and Developing new capabilities Overcoming the new entrants into the industry. Cost of new product development To avoid excessive competition

All-cash transaction, US $6.0 billion, including approximately US $2.4 billion of debt. Global integrated aluminium producer with lowcost alumina and aluminium production facilities. Biggest rolled aluminium products maker and fifth -largest integrated aluminium manufacturer in the world. Globally positioned organization

-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 Noveliss equity, Hindalco borrowed almost $2.85 billion (of the balance, $300 million is being raised as debt from group companies and $450 million is being mobilised from its cash reserves.

Hindalco will be able to ship primary aluminium from India and make value-added products. Hindalco metal is accepted under the high-grade aluminium contract on the LME as a registered brand. Hindalcos rationale for the acquisition is increasing scale of operation, entry into high end downstream market and enhancing global presence(11 countries).

Post acquisition, the company will get a strong global footprint. The deal will give Hindalco a strong presence in recycling of aluminium business. Novelis has a very strong technology for value added products and its latest technology Novelis Fusion is very unique one. As per company details, the replacement value of the Novelis is US $12 billion, so considering the time required and replacement value; the deal is worth for Hindalco.

To conclude the achievements in the fiinancial year, the company recorded a commendable performance in an extremely difficult year that witnessed unprecedented events in the financial and commodity markets. This performance is because of the underlying strength of business operations & project management capabilities.

Annual report of Hindalco 2008-09 www.hindalco.com www.adityabirla.com www.novelis.com/Internet/enUS/AboutUs/History/