Hindalco Industries Ltd chairman Kumar Mangalam Birla plans to take majority control of the firm—India’s biggest aluminium producer—to forestall a takeover.
“I would like our stake to be more than 50% and if not, at least 40%” in the next two years, Birla said on Monday in an interview in Mumbai. His family owns 31.4% of the $5.6 billion (Rs22,512 crore) company, according to its website.
A five-year rally in metals has spawned $106 billion of proposed takeover offers in the mining and metals industry this year, after bids valued at $183 billion in 2006, according to Bloomberg data.
Rio Tinto Group agreed to buy Alcan Inc. for $38.1 billion in cash on 12 July, trumping a hostile bid by Alcoa Inc. to form the world’s biggest aluminium maker.
“The entire industry has been re-rated” after Rio’s bid for Alcan, said Niraj Shah, an analyst at Prabhudas Lilladher Pvt. Ltd, a Mumbai brokerage. He rates Hindalco stock a “market performer”.
Shares of Hindalco, which in May acquired Atlanta-based Novelis Inc. for $3.4 billion, have gained 12.4% since Rio’s bid for Alcan. The family will use the so-called creeping acquisition route that allows company founders to increase their stake by up to 5% each year, Birla, 40, said.
Global steel makers have been putting defensive measures in place after Mittal Steel Co.’s $38.3 billion purchase last year of Arcelor SA and Tata Steel Ltd’s acquisition of UK’s Corus Group Plc. for $12.9 billion in January.
Shares of South Korea’s Posco reached a record on Monday after Asia’s third biggest steel maker bought its own stock to strengthen defences against possible takeover attempts. Posco has swapped stakes with investors such as Japan’s Nippon Steel Corp., the world’s second largest steel maker, and Hyundai Heavy Industries Co., the world’s biggest shipbuilder.
“You have to constantly protect your assets and these days companies are even getting together to safeguard themselves from bigger rivals,” said Shah. “Anything is possible. There’s a lot of money floating around.”
Hindalco last week agreed to buy the remaining 45% of Utkal Alumina International Ltd it didn’t own, from partner Alcan. The Montreal-based company had said in April that it didn’t have enough influence in the venture.