Hindalco Surges on Report It May Be a Takeover Target

June 4 -- Shares of Hindalco Industries Ltd., India's biggest aluminum producer, rose amid speculation the company may become a takeover target.

Alcan Inc. may partner 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., the Times of India said today in a column. "We do not comment on such wild rumors," said Pragnya Ram, Hindalco's spokeswoman in Mumbai.

Hindalco climbed 4 percent to 146.6 rupees at the 3:30 p.m. close of trading on the Bombay Stock Exchange. The stock earlier climbed as much as 11 percent to 156.25, the biggest gain since Sept. 13, 2000.

"One has to guard against any hostile bids especially at a time when even companies like Alcan are not being spared," said Shridhar Iyer, vice president at Mumbai-based Batlivala & Karani Pvt. "The promoters will have to raise their defenses."

Dhanpal Jhaveri, a spokesman for Vedanta Resources Plc, which controls 79 percent of Sterlite, declined to comment on the report. Tarun Jain, finance director of Sterlite, couldn't be reached for comment.

Alcoa made a $27 billion unsolicited bid for Alcan on May 7 after two years of talks failed to create what Alcoa called a merger of equals. Alcan urged shareholders to reject the offer on May 22, saying the bid was too low and that it's in talks with other unidentified suitors.

'Baseless Stories'

Hindalco last month completed buying Novelis Inc. for $6 billion, including $2.4 billion of debt, to gain a fifth of the high-end aluminum market and access to U.S. customers including Coca-Cola Co. Novelis, separated from Alcan in 2005 to ease antitrust concerns, reported a loss of $275 million for 2006.

"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 Birla group, one of India's oldest family owned businesses with interests in metals, cement, financial services, telecommunication and fertilizers, has 30 percent of Hindalco. State-run insurance companies, which own a 12.15 percent stake, may back Billionaire Kumar Mangalam Birla if the company becomes a takeover target, analysts said.

"Indian institutions will stand by Hindalco," Daga said. "This is the Birla Group you're talking about."

Birla, 39, was ranked 86th on the Forbes list of the world's richest people last year.