WASHINGTON: In Atlanta's corporate pecking order, Novelis isn't exactly a top dog. The southern city, dubbed Hotlanta for its sizzling economic growth in the last couple of decades, ranks third in the number of Fortune 500 companies it headquarters. It is home to such marquee name as Coca Cola, CNN, Delta Airlines, UPS, and Home Depot.
So when Hindalco bought Novelis for a pricey $6 billion last week, even the local Atlanta Journal Constitution barely took notice, describing the Canadian-American transplant as a "little-known but major Atlanta company." Except for Novelis shares jumping up by 13.3% on a down day on Wall Street (while Hindalco share holders in India carried the can and lost 14%), there was barely a ripple. Just another normal business day in US.
But some where down the line, when a forlorn American kicks a Coke can down the road or downs a six-pack of Budweiser in despair, he or she will be ringing the Hindalco's cash register. For what the Indian company has done is bought into a piece of Ameri'can'a that has tinny, worldwide resonance.
Novelis supplies customers on four continents, principally America, with flat-rolled aluminum in sheet and coil form for the production of beverage cans, food cans, and screw-caps. And its two most famous clients - Coca-Cola and Anheuser-Busch.
And that's just on the shelf. Hindalco-Novelis, or whatever the new entity will be called, will also be significant presence in the show room and on the road, since the automotive and transportation industry is another big user of lightweight sheet aluminum that is the companys specialty.
Experts say the Hindalco-Novelis deal makes sound sense. The Indian company gets access to new technologies and a beverage container market that kicks around 200 billion cans across the world, not to speak of screw caps and bottle closures of every conceivable type. Then there is an Indian market that has traditionally been bottle-oriented.
"It's a growth market any way you look at it, and yet another sign that India is beginning to think international," says Ajay Kohli, Professor and Isaac Stiles Hopkins Chair in Marketing at Atlantas Emory University.
An American inventor came up with the pull-top can design in 1963 and later sold his to Alcoa and Pittsburgh Brewing Company. But it wasn't till the mid 1980s that such cans (which are a standard 12 fluid ounces or 355 ml in US) supplanted bottles. They spread rapidly to Europe (where cans are 330ml standard) and Australia (375 ml).
One reason for their universal popularity (beside that men can show off their macho side by crushing them): 97% of all cans are recycled. With Hindalco's acquisition, India will be a major, even if invisible, presence in every store and supermarket in America and much of the world. Much like its Indian peer Essel Propack, which makes laminated tubes for products like toothpastes, or Moser Baer, which makes data storage media. And thus, another small, unmarked piece of western business goes the Indian way. This time from the city that made "Gone with the Wind."
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