Hindalco Industries Ltd., the Mumbai-based aluminum and copper company, will purchase world-leading rolled aluminum company Novelis for $44.93 per share, a 17% premium to the shares' Friday close. The deal totals $6 billion including $2.4 billion in debt and is expected to close in Q2. Toronto-based Novelis, a spin-off of Alcan, produces sheets of rolled aluminum that are used in cans, cars and construction materials. Novelis reported a Q3 loss of $102 million ($1.38/share) versus net income of $10 million ($0.14/share) a year earlier. For the first nine months of 2006, Novelis had a net loss of $170 million ($2.30/share) from net income of $32 million ($0.43/share) the year before, reflecting a crunch between higher metal costs and price ceilings on North American can-sheet sales. The purchase will give Hindalco access to clients like GM, Ford, Eastman Kodak and Coca-Cola. As Indian domestic growth speeds up, Indian companies are acquiring more companies abroad in a bid to add capacity and expand their markets; last month, Tata Steel bought British steel company Corus Group for $12 billion.
Sources: Bloomberg, MarketWatch, TheStreet.com, Wall Street Journal, Press release
Commentary: Novelis: Recent 8-K Reveals Generous Executive Parting Gifts • Indian Manufacturing and Construction Should Fuel Ongoing Growth • Tata Steel Wins Corus in an All-Night Auction
Stocks to watch: Novelis Inc. (NVL), Hindalco Industries Limited (Bombay: 500440). Competitors: Alcoa Inc. (NYSE:AA), Corus Group plc (NYSE:CGA)
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