Aditya Birla to raise Hindalco stake - official

MUMBAI - The parent of Hindalco Industries, top aluminium maker, will lift its equity stake to at least 40 percent, the company said on Tuesday, a move analysts said was aimed at warding off hostile takeovers. "The chairman is looking at raising stake in Hindalco to at least 40 percent," Pragnya Ram, spokeswoman for the parent Aditya Birla Group told Reuters. Chairman Kumar Mangalam Birla and other companies in the Aditya Birla Group owned 31.4 percent of Hindalco at the end June, up from 27.1 percent at the end of March following an issue of 67.5 million shares to the owners, stock exchange data showed. In March, Hindalco also said it would issue up to 80 million warrants to its founders, which is estimated to take their stake to nearly 35 percent once they are converted into shares. Ram said that Indian law allowed founders to raise their stakes in their companies by a maximum of 5 percent each year. Hitesh Agrawal, a metals analyst with Angel Broking, said the move would help the company ward off hostile takeovers. "Global majors are sitting on huge cash and the sector outlook is good. So there is always possibility of hostile bids in the metals space," Agrawal said. Hindalco's shares had surged as much as 10.8 percent on June 4 on speculation that it could become a takeover target, after a newspaper reported Canada's Alcan Inc. could team up with India's Sterlite Industries to bid for it as a way of making Alcan less of a takeover target. Tata Group, another Indian conglomerate, raised its stake in Tata Steel, the world's sixth-largest steel maker, to 33.8 percent at the end of June from 26.8 percent in March 2006, a step it has said was to prevent possible hostile bids. Birla was last year quoted saying he was always looking to raise his stake in Hindalco, and that the stake would be gradually increased through creeping acquisition route. Hindalco bought Canadian aluminium maker Novelis earlier this year. Shares in Hindalco closed 0.9 percent up at 186.55 rupees in a Mumbai market that rose 0.4 percent.