New Delhi: Shares of Hindalco Industries Ltd, India’s biggest aluminium producer, hit a 7-year high on the Bombay Stock Exchange (BSE) on Monday amidst speculation that the company is becoming a takeover target.
There are reports that Canadian company Alcan may team up with Anil Agarwal-promoted Sterlite Industries for a hostile takeover bid for Hindalco. The A V Birla Group holds only 27 per cent stake in Hindalco while FIIs and institutions hold 20 per cent and 12 per cent respectively.
To raise money for its Novellis takeover, Hindalco had made a preferential allotment of 14.75 million warrants and shares in April, which could take the promoter holding to about 35%.
Sterlite has always been trying to increase its market share in India. It plans to become the No.1 aluminium player in the country and this is one factor, which the group will be looking at.
In case Alcan makes a bid for Hindalco it will make it highly unattractive for other players, as it will be embroiled in a hostile bid unless the Aditya Birla Group becomes willing to sell.
Most analysts are of view that the deal will not go through, as Hindalco is an Aditya Birla undertaking and taking over a company of this size and stature would be very difficult.
Post-media reports that Sterlite and Alcan may acquire stake in Hindalco, the Hindalco stock rose to its three-month high.
“A hostile takeover of Hindalco is unthinkable and out of question. I don’t think too many people can buy off a blue blood Birla company in this country. The Birlas won’t turn away. The Birlas and Tatas are all institutions in this country and I think NRIs and multinationals stand in the queue. It is out of the question. If the young Birla wants to sell Hindalco then that’s a different matter. But a hostile takeover of Hindalco is unthinkable,” Portfolio Manager P N Vijay told moneycontrol.com.
Jagdish Malkani, Member, NSE, feels its stocks looking for stories. “I think it is stocks looking for stories. I find this a bit of a stretch of the imagination. To have a Kumar Birla company out there being really picked out etc, I don’t think the Indian market is ready yet. If anything, they themselves could be averaging some stake. There is a lesson in it that just like Tata Steel. These are very valuable companies and the promoters want to beef up their stake as much as they can till they get to that elusive 51%. May be it is some of their own buying. But I wouldn’t put too much credence to it,” he added.
With excerpts from moneycontrol.com
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