Click to play videoMumbai: After the mega Tata-Corus deal, its now turn of Hindalco, India's largest non-ferrous metal company to make an overseas acquisition. Hindalco has acquired US based company Novellis in an all cash deal of $6 billion.
The transaction which has been approved by the boards of both companies will now need the approval of 66 per cent of the shareholders for the deal to finally go through.
Corporate India is shining and clinching deals one after another. With the acquisition of Novellis, Hindalco hopes to establish a global integrated aluminum producer with low-cost alumina and aluminum production facilities combined with high-end aluminum rolled product capabilities. Novellis shareholders will receive $44.93 in cash for each outstanding common share.
Aditya Birla Group Chairman Kumar Mangalam Birla said, “We are excited about this transaction. Both from Hindalco and group perspectives this catapults our group and Hindalco right on the threshold of becoming a fortune 500 company.”
Hindalco also considers Novellis drown stream business the major driver for the combined entity. This is expected to insulate the company from any downturn in economic cycles in the future.
“No risk, this downstream business has a very steady cash flow. In terms of timing we can’t expect Novellis to sell exactly at the time we would have wanted to buy,” Birla added.
Hindalco has also built a ring fence in the agreement signed with Novellis, which would protect them from competitive bidders. Any competitive bidder would have to pay Hindalco $100 million as a break free option if they choose to up the bid.
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