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Takeover rumours fire up Hindalco stock

June 5th, 2007

Mumbai : 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.

Rumours about Alcan Inc partnering Anil Agarwal-promoted Sterlite Industries Ltd to make a bid for Hindalco in an attempt to fend off a hostile takeover attempt by New York-based Alcoa Inc, set the Hindalco stock on fire.

The markets had hammered the stock ever since the company announced its $6 billion acquisition of Canadian sheetmaker Novelis earlier in February this year.

The Hindalco stock climbed 4% to close at Rs 146.6 on the BSE. The stock earlier climbed as much as 11 % to Rs 156.25, its biggest gain since September 13, 2000.

“The Aditya Birla Group does not comment on such wild, baseless, speculative news stories,” was the official comment from the group.

An industry observer added, “Such rumours are deliberately floated by the stock markets to hike the share price and help minority shareholders exit a stock that has been underperforming.” Hindalco last month completed buying Novelis Inc.

“The acquisition is just over and now the integration of the companies, which is a huge task, is being undertaken,” said Giriraj Daga, an analyst at Khandwala Securities Ltd in Mumbai.

“There’s too much going on for Hindalco to become a takeover target or buy a company. The takeover stories are baseless.”

The $24 billion Aditya Birla Group, one of India’s oldest family-owned businesses with interests in metals, cement, financial services, telecommunications and fertilizers, own about 27% of Hindalco.

State-run insurance companies, which own a 12.15% stake, may back Kumar Mangalam Birla if the company becomes a takeover target, analysts said. “Indian institutions will stand by Hindalco,” Daga said.

Source : Financialexpress.com

Entry Filed under: minerals and metals