Hindalco shares surge on takeover talk

Shares of Hindalco Industries Ltd., India's largest aluminium producer, jumped on Monday after a national daily reported that Canada-based Alcan Inc. and Sterlite Industries Ltd. were planning to acquire the Aditya Birla group company.

Alcan, which has rejected a hostile takeover bid from rival Alcoa Inc., is looking to avoid being a takeover target and is examining various options. It is looking at an acquisition itself or may seek a white knight to combat the threat from Alcoa.

Norway's Norsk Hydro ASA and the Rio Tinto Group may compete with Alcoa's US$27.7bn bid for Alcan, international media reports have indicated.

While rejecting the Alcoa bid, Dick Evans, CEO of Alcan, had said that the company was in discussions with third parties. "We prefer an offensive strategy to a defensive strategy and are seeking alternatives that create shareholder value," Evans said.

Alcan urged shareholders reject Alcoa's unsolicited offer on May 22, saying that the bid was too low.

Another leading national daily reported last week that Hindalco and Sterlite will join the race for acquiring Alcan. The newspaper said that the two were in talks with BHP Billiton Ltd. and Rio Tinto, respectively for making an offer for the Canadian aluminium giant.

At 12:46 pm, Hindalco's shares were trading at Rs149, up Rs8 or 5.8% from the previous close after touching a high of Rs156. The benchmark BSE Sensex was down 62 points or 0.4% at 14,506 after being as high as 14,683.