Hindalco's Acquisition of Novelis


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:
Case Code : BSTR265 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges

Themes

Mergers | Acquisitions | Strategic Alliances
Case Length : 17 Pages
Period : 1991 - 2007
Pub Date : 2007
Teaching Note : Not Available
Organization : Hindalco, Novelis
Industry : Metal and Mining
Countries : US, Canada

Abstract:

The case discusses the acquisition of US-Canadian aluminum company Novelis by India-based Hindalco Industries Limited (Hindalco), a part of Aditya Vikram Birla Group of Companies, in May 2007. The case explains the acquisition deal in detail and highlights the benefits of the deal for both the companies.

It also examines the valuation of the acquisition deal and how the deal was financed. The case concludes by describing the challenges that Hindalco would face in integrating the operations of Novelis and analyzing if the deal was overvalued as opined by some industry experts.

Issues:

» Study the synergies of the merger between Hindalco and Novelis

» Study the rationale behind Hindalco acquiring a loss making aluminum company

» Examine the way the acquisition deal was financed

» Analyze whether the deal was overvalued or not

» Analyze the trends in the global aluminum industry

Contents:

  Page No.
Introduction 1
Background Note 2
The Deal 5
Rationale for Acquisition 6
The Pitfalls 8
Exhibits 10

Keywords:

Hindalco Industries Limited, Novelis Inc., Merger and Acquisition, Deal Valuation, Debt-equity Ratio, EV/EBITDA Ratio, Indian Aluminum Industry, Merger Integration, Consolidation, Downstream Business, Upstream Business

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