Novelis nod for Hindalco bid

Hindalco Industries today announced that the shareholders of Novelis approved the former's proposal to purchase the latter.

The shareholders' approval followed a proposal of Hindalco to acquire the Atlanta-based aluminium downstream leader Novelis for an enterprise value of nearly $ 6 billion three months ago.

Around 99.8 per cent of Novelis shareholders cast votes in favour of the transaction. Under the Canadian laws, the proposed acquisition required support from at least 66. 44 per cent of the shareholders.

The terms of agreement signed between Novelis and Hindalco envisaged that Hindalco will pay $ 44.93 a share, amounting to $3.5 billion (Rs 14,364 crore).

Hindalco expects to complete the transaction, which now awaits the court approval, by May 15. The Birla group's Canada-based special purpose vehicle, AV Metals, will infuse $3.5 billion to finance the deal.

Of this, A V Metals will take loans worth $ 2.8 billion from three financial institutions namely UBS, ABN Amro and Bank of America.

This includes bridge loan of $1.4 billion at a coupon rate of 7.2 per cent. These three institutions have underwritten the debt amount with UBS taking care of the majority portion. UBS is financial advisor to Hindalco.

Essel Mining & Industries, a closely held company of the group, will bring in $ 300 million, while Hindalco will mobilise $ 450 million from its treasury operations.

Novelis, which was spun off from Alcan two years ago, is the global leader in aluminium rolled products and aluminium can recycling. The company operates in 11 countries and has $ 10 billion of revenues. It has 12,500 employees in 11 countries. Novelis produces 19 per cent of world's flat rolled aluminium products. It has debt of $2.4 billion.