Billionaire moves to prevent takeovers of Hindalco

MUMBAI: Kumar Mangalam Birla, the Indian billionaire, plans to take majority control of Hindalco Industries, India's biggest aluminum producer, to forestall a takeover. "I would like our stake to be more than 50 percent and if not, at least 40 percent" in the next two years, Birla said Monday in an interview in Mumbai. His family owns 31.4 percent of the $5.6 billion company, according to its Web site. A five-year rally in metals has spawned $106 billion of proposed takeover offers in the mining and metals industry this year, after bids valued at $183 billion in 2006, according to Bloomberg data. Rio Tinto Group agreed to buy Alcan for $38.1 billion in cash this month, trumping a hostile bid by Alcoa to form the world's biggest aluminum maker. "The entire industry has been rerated" after Rio's bid for Alcan, said Niraj Shah, an analyst at Prabhudas Lilladher, a brokerage in Mumbai. He rates Hindalco stock a "market performer." Shares of Hindalco, which in May acquired Novelis, based in Atlanta, for $3.4 billion, have gained 12.4 percent since Rio bid for Alcan. The family will use the so-called creeping acquisition route that allows company founders to increase their stake by up to 5 percent each year, Birla said. Global steelmakers have been putting defensive measures in place after Mittal Steel's $38.3 billion purchase last year of Arcelor and Tata Steel's acquisition of Corus Group for $12.9 billion in January. Shares of the South Korean steelmaker Posco reached a record Monday after it bought its own stock to strengthen defenses against possible takeover attempts. Posco has swapped stakes with investors such as Nippon Steel of Japan, the world's second-largest steelmaker, and Hyundai Heavy Industries, the world's biggest shipbuilder, as a defensive measure. "You have to constantly protect your assets, and these days companies are even getting together to safeguard themselves from bigger rivals," Shah, of Lilladher, said. "Anything is possible. There's a lot of money floating around." Hindalco has yet to decide if it will bid for metal assets that Rio could sell to help fund its takeover of Alcan, Birla said. Rio will sell Alcan's packaging business and may dispose of other units of the enlarged company. "We haven't really thought about it and have held no talks with Rio Tinto," Birla said. "At the moment, we are focusing on integration of Novelis" with Hindalco. Novelis was separated from Alcan in 2005 to ease antitrust concerns.