Hindalco Industries will buy the worlds leading producer of aluminium rolled products, with it valued at approximately £3.07 billion (US$6 billion), including around £1.23 billion (US$2.4 billion) of debt.
Under the terms of the agreement, Novelis shareholders will receive £23.01 (US$44.93) in cash for each outstanding common share, with Hindalco becoming the worlds largest aluminium rolling company, one of the biggest producers of primary aluminium in Asia and Indias leading copper producer.
The Mumbai-base company is the flagship company of the Aditya Birla Group. Its chairman Kumar Mangalam Birla said: The acquisition of Novelis is a landmark transaction for Hindalco and our group.
It is in line with our long-term strategies of expanding our global presence across our various businesses and is consistent with our vision of taking India to the world.
The transaction has been unanimously approved by the boards of directors of both companies and is expected to be completed in the second quarter of 2007.
Hindalco managing director Debu Bhattacharya said: There are significant geographical market and product synergies. Novelis is the global leader in aluminium rolled products and aluminium can recycling, with a global market share of about 19%.
Hindalco has a 60% share in the currently small but potentially high-growth Indian market for rolled products. Hindalcos position as one of the lowest cost producers of primary aluminium in the world is leverageable into becoming a globally strong player. The Novelis acquisition will give us immediate scale and a global footprint.
Novelis operates in 11 countries and employs approximately 12,500 staff in Asia, Europe, North America and South America. Its acting chief executive Ed Blechschmidt said: After careful consideration, the board has unanimously agreed that this transaction with Hindalco delivers outstanding value to Novelis shareholders.