Hindalco’s bid for Novelis may see competition from Russian steel major Rusal. Rusal is the world’s largest aluminium and alumina producer. Hindalco will pay the shareholders of Novelis $44.93 per share, or $6 bn, to buyout the US-based company.
Hindalco’s offer has been cleared by the Novelis’ board but is yet to be approved by shareholders. Novelis was spun off Canadian aluminium major Alcan but incorporated in Atlanta in the US. Under Canadian laws, any new bidder would have to pay a break-fee and also better the existing offer. Other potential bidders, such as private equity firm Texas Pacific Group, are also considering mounting a counter-bid for Novelis. Texas Pacific Group controls US-based Aleris.
Regulations stipulate a $100 mn break-fee payable to Hindalco, if a competing bid is made and if in the event, the deal is derailed. As per terms agreed between the Hindalco and Novelis boards, about 66.66% of Novelis shareholders present and voting must tender their shares for Hindalco to go ahead with the deal.
Rusal recently created a three-way merger with Russia’s Sual group and Switzerland’s Glencore International to become the world’s largest aluminum and alumina producer. The annual production would total 4 mn tonnes of aluminum and 11 mn tonnes of alumina, accounting for about 12.5% of global aluminum and 16% of the global alumina market.
Read more in The Economic Times article.
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