Are Birlas answering Tatas?

It's only 2 weeks or less when Tata announced the biggest ever takeover worth $12 billion, Kumar Birla have announced that his company Hindalco Industries, India's largest aluminium producer, has agreed to buy its US-Canadian rival Novelis for $5.9bn (£3bn) in an all-cash deal.

Kumar Birla claims this to be India's largest acquisition of a North American company and is hopeful to catapult them into a Fortune 500 companies list.

Some facts about the deal!!
1. Novelis is the world's largest producer of rolled aluminium and its customers include Coca-Cola and the world's largest canmaker Rexam.
2. Novelis is headquartered in Atlanta, Georgia, but registered as a Canadian company.
3. Its shares are listed in both Toronto and New York.
4. The deal of $5.9 billion also includes $2.4 billion of debt
5. Based in Mumbai, India, Hindalco is a leader in Asia's aluminum and copper industries, and is the flagship company of the Aditya Birla Group, a $12 billion multinational conglomerate, with a market capitalization in excess of $20 billion.
6. Following the transaction, Hindalco, with Novelis, will be the world's largest aluminum rolling company, one of the biggest producers of primary aluminum in Asia, and India's leading copper producer.
7. Novelis is the global leader in aluminum rolled products and aluminum can recycling, with a global market share of about 19%.
4. Hindalco's shares were down 14% in Monday trading following the announcement.

About Novelis
Novelis is the global leader in aluminum rolled products and aluminum can recycling. The Company operates in 11 countries, has approximately 12,500 employees, and reported $8.4 billion in 2005 revenue. Novelis has the unrivaled capability to provide its customers with a regional supply of technologically sophisticated rolled aluminum products throughout Asia, Europe, North America and South America. Through its advanced production capabilities, the Company supplies aluminum sheet and foil to the automotive and transportation, beverage and food packaging, construction and industrial, and printing markets. Visit http://www.novelis.com.

About the Aditya Birla Group
The Aditya Birla Group is India's first truly multinational corporation, with a workforce of 85,000 employees belonging to over 20 different nationalities. Its 74 state-of-the-art manufacturing units and service facilities span India, Thailand, Laos, Indonesia, Philippines, Egypt, Canada, Australia, China, USA, UK, Germany, Hungary and Portugal. A premium conglomerate, the Aditya Birla Group participates in a wide range of market sectors including, viscose staple fiber, non-ferrous metals, cement, viscose filament yarn, branded apparel, carbon black, chemicals, fertilizers, sponge iron, insulators, financial services, telecom, BPO and IT services. Visit http://www.adityabirla.com.

About Hindalco
Established in 1958, Hindalco is currently structured into two strategic businesses, aluminum and copper, with 2006 revenues of approximately $2.6 billion. Hindalco's integrated operations and operating efficiency have positioned the company as Asia's largest integrated primary producer of aluminum and among the most cost-efficient producers globally. Its copper smelter is the world's largest custom smelter at a single location. Hindalco stock is publicly traded on the Bombay Stock Exchange and the National Stock Exchange of India Ltd. Its current market capitalization is $4.3 billion. Visit http://www.hindalco.com.

------------------------------------------------------------------------------------

Is this a beginning of an era of Indian industrialists? or it has already begun and we are going to see couple of more takeover to top it up? In underworld there is something called 'Gangwar'. When a mafia sees that somebody else is trying to overpower him.. he starts attacking the opponent & soon a war starts. Is this a similar phenomena in the corporate world?

Under the terms of the agreement, Novelis shareholders will receive $44.93 in cash for each outstanding common share. But Indian shareholders lost 14% of the sharevalue of their portfolio in 1 day. Same is the story about Tisco..it lost almost 20% its share value since the takeover announcement. Well.. it can be a part of consolidation in the Asian market...but as a major its a impact of the news that Hindalco is taking over $2.4 billion of debt in the deal.

So where are we going? Are we creating value or betting on money from Indian Investors? If you are a responsible investor & citizen, it calls for a comment.

- Mumbaikar