AV Birla Group bids €85 mn for Italian fibre firm

The AV Birla Group has reportedly made a bid of close to €85 mn to acquire Italian cellulose fibre company BembergCell. Bemberg Cell is a financially distressed company and is on the block through a corporate administered process.

BembergCell has three production centres located in Italy with 155 spinning machines to produce yarns. BembergCell is the result of the union of three companies: Bemberg, Novaceta and Nuova Rayon. The company employs close to 400 people. The other bidders in the fray include a top manager of another Italian fibre company, Italo Fabbro, and Germany-based International Chemical Investor, promoter of the brand Erika.

Read The Economic Times article.

Hindalco Industries buys US-based metal major Novelis for $6 bn

Hindalco Industries, the AV Birla Group’s flagship company and India’s largest aluminium producer, will acquire US-based aluminium company Novelis for $6 bn. The deal envisages a payment of $44.93 per share, which is 16.5% more than its last closing prices to Novelis shareholders amounting to a total of $3.5 bn. In addition, Hindalco will take on its books Novelis’ debt of $2.4 billion. The acquisition would help Hindalco get access to large customers like Coca-Cola, Ford, General Motors, Eastman Kodak and Thyssenkrupp. The acquisition is expected to be completed by the second quarter of 2007. The Novelis board has recommended the offer to its shareholders, largely financial institutions. The Novelis management will remain unchanged after the acquisition.

Novelis was spun off from Alcan, Inc. to meet anti-trust concerns after acquiring France’s Pechiney SA for about $4 bn in February 2004. it controls 19% of the world’s flat-rolled aluminium production. It is also the global leader in recycling of aluminium cans. The company operates in 11 countries and has 12,500 employees.

To finance the deal, Hindalco will contribute $450 mn from its treasury operations, while a closely held group company, Essel Mining & Industries, will invest another $300 mn. UBS is the financial advisor to Hindalco for the acquisition.

Novelis has about $3.2 bn in debt and loans outstanding. In November 2006, it reported a loss of $102 mn, or $1.38 a share, in the third quarter. In 2005, the company had reported net sales of $8.4 bn but incurred a loss due to contractual obligations. It is expected to turn profitable in 2010.

Read the article in Business Standard.

AV Birla Group to split Madura Garments two-way

Madura Garments, India’s largest branded apparel business, will be split into two separate companies by its owner, the AV Birla Group (AVB). AVB would carve out separate entities for lifestyle and mass brands out of the unlisted company.

The group will unveil MG Lifestyle Brands & Retail Business, a new fashion brands company operating with key brands such as Louis Philippe, Allen Solly and Van Heusen, besides lifestyle retail formats such as Planet Fashion and Trouser Town. SF Jeans, Madura’s denim brand, and the international licensed brand Esprit will also be part of the new entity. MG Popular Brands & Retail Business would operate in the mid-priced-to-mass category with brands like Peter England. Both the new entities will be divisions of AV Birla Nuvo.

Madura Garments is expected to report revenues of round Rs. 600-650 crores in FY 2007, and is currently the leader in the domestic apparel space with annualized growth of 20% in recent years. AVB acquired Madura Garments from UK’s Coats for Rs. 236 crores in 1999. The fashion brands company, which will also include Allen Solly Womenswear and Van Heusen Womenswear, is likely to report a topline of Rs. 450-480 crores, while the standalone Peter England is likely to show up with a Rs. 180 crore-turnover in FY 2007.

Read The Economic Times article.