Meet the master of mergers and acquisitions

Meet the master of mergers and acquisitions
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First Published: Mon, Feb 12 2007. 01 32 PM IST
Updated: Mon, Feb 12 2007. 01 32 PM IST
Mumbai: Even as the rest of India tries to come to grips with Hindalco’s $6 billion (Rs26,400 crore) acquisition of the Atlanta-based Novelis Inc., Kumar Mangalam Birla will be busy elsewhere. The 39-year-old chairman of the Aditya Birla Group, of which Hindalco is a part, will be at a quiet function in Mumbai to release grandfather Basant Kumar Birla’s autobiography, One Day at a Time.
Kumar Mangalam Birla may have spent just 11 years as the head of the group, but he has made it amply clear in this period that he is willing to diversify into new areas, divest businesses that do not seem to have a future, look at opportunities outside India, even play M&A hardball with hostile acquisition targets—anything, in short, that can add shareholder value.
“He (Kumar Mangalam Birla) is back to his favourite game of mergers and acquisitions,” says a Mumbai-based investment banker who has worked with Birla on several transactions. “That is how he transformed the group into a $12-billion conglomerate.”
In 1995, when Aditya Birla died young, at 52, most people believed that his son, the shy and reticent Kumar Mangalam Birla, would not be able to run a Rs8,000 crore business empire that spanned several continents and business areas.
The young Birla has not only run the group, he has run it well and grown it. In the process, he has also professionalised a group that has historically rated loyalty over capability. His track record isn’t without blemish: he took a long time to decide what to do with the group’s interests in telecommunications. Once he decided that it was a business he wanted to be in, he moved quickly to buy out the Tata group’s stake in Idea Cellular in April 2006.
Since then, the Aditya Birla Group has focused on growing Idea into a company that offers mobile telephony services across the country. Idea Cellular’s initial public offering, to raise Rs2,125 crore, opens on Monday. And in early January, a few days after Birla decided that organised retail was another business his group wanted to be in, he acquired Trinethra Superretail, a company that runs retail stores in the four southern states, for Rs350 crore.
Birla may have completed several acquisitions, but the Novelis one takes him, Hindalco, and the group to an entirely different level. Novelis is almost half the size of the entire Aditya Birla Group in terms of sales. “He is now willing to take bigger bets, and this shows a higher degree of confidence,” Sumant Sinha, a director at Birla Management Corporation, says.
Sinha, an alumnus of IIT, Delhi and IIM, Bangalore, is the son of India’s former finance minister Yashwant Sinha, and was a top executive in ING Barings’ Asian operation when Birla wooed, and finally hired him. He is around the same age as Birla, and was one of several senior executives hired by the group as it tried to fill its ranks with professional managers. That meant allowing several people over the age of 60, some of whom had loyally served his father, go, but Birla did it dispassionately. Today, his 20 senior-most executives, including some with groupwide responsibilities, report directly to Birla.
The Novelis acquisition does raise the obvious question about financing and the investment banker who has worked with Birla says, “It will be interesting to see how he raises money for the acquisition.” In late January when news that the deal was happening made the rounds, Hindalco stock rose sharply.
Like Birla, there were others who thought the company could make an acquisition that size.
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First Published: Mon, Feb 12 2007. 01 32 PM IST
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