Ess Dee Says Competes With Essel for Alcan's Packaging Arm

Sept. 14 -- India's Ess Dee Aluminium Ltd. said it is competing with local rival Essel Propack Ltd. to buy the packaging arm of Alcan Inc. to gain access to overseas markets. "The negotiation process has just begun," Ess Dee Managing Director Sudip Datta said in a telephone interview in Mumbai. "Besides us, Essel is also in the fray." He estimated the value of the unit at $800 million. Essel Propack chief operating officer-global R. Chandrasekhar declined to comment. Spurred by an economy growing at 9 percent a year, Indian companies are seeking acquisitions in mature overseas markets to sell higher-margin goods and add capacities. Hindalco Industries Ltd. bought Atlanta-based Novelis Inc. for $3.4 billion in May. Rio Tinto Group, which acquired Canada's Alcan Inc. for $38.1 billion in cash, is planning to sell some businesses to help pay for the transaction, including Alcan's packaging unit. Alcan considered selling the unit before Rio's offer and has seen interest from both private-equity firms and other buyers, Chief Executive Officer Dick Evans said July 31. Alcan has packaging units across 13 countries. The Business Standard newspaper first reported that Ess Dee had bid $1 billion for the Alcan unit. DSP Merrill Lynch Ltd. and Enam Securities Pvt. are Ess Dee's advisers. Ess Dee plans to raise funds by selling a stake in the company to strategic investors, Datta said. "We have raised about $20 million by selling a 5 percent stake to Morgan Stanley and are open to selling stakes to other investors," he said. "Also being a debt-free company will help getting loans for this purchase." Ess Dee has an annual capacity of 9,100 metric tons.