Hindalco shares rise 4% on takeover buzz

The Aditya Birla group-promoted Hindalco industries, the country's largest aluminium producer, surged by about 4 per cent on the bourses to Rs 146.60 on market buzz that it could be a takeover target of the Alcan-Sterlite combine.

On a dull trading day, the scrip was the top gainer among the 30 Sensex stocks. It hit a day's high of Rs 156.25, before profit-booking saw the counter shedding early gains.

The Birla Group holds about 30 per cent stake in Hindalco with foreign institutional investors (FIIs) and institutions holding 20 per cent and 12 per cent, respectively. About 10 per cent is in GDRs, while the remaining is with retail investors.

Sources in the Birla Group said the consolidation in the metal industry was taking place across the world where an identifiable promoter is not present. In Hindalco's case, there is an identifiable promoter who holds 30 percent stake and would not sell under any circumstances.

Besides, the domestic financial institutions led by Life Insurance Corporation and General Insurance Corporation, which hold 12 per cent stake, have never de-established the present management and historically never preferred hostile takeovers.

Tarun Jain, director of Sterlite Industries, said the company has got no arrangement with Alcan. "We have no intention to buy any stake in Hindalco."

Though 40 to 45 percent Hindalco stake is still floating in the market, it would not help the hostile bidder as the present promoter can block any resolution, they pointed out.

Analysts, who track Hindalco, also hold a similar view. "Hindalco is a good company with tremendous growth prospects. Barring a short term view, there is no reason why anyone should take over the aluminium major. Even the FIIs would not want to sell their stake in Hindalco," said Hitesh Agarwal, metals analyst, Angel Broking.