Mergers, Acquisitions, Alliances and Synergies Case Study

Case Title:

RUSAL-Sual Merger: Consolidation in the Global Aluminium Industry

Abstract:
A proposed triumvirate between RUSAL, SUAL and GLENCORE had been in the offing that would create a new aluminium giant in Russia.RUSAL (known as Russian Aluminium company), owned by Oleg.V.Deripaska was the largest aluminium producer in Russia and globally the third-largest in terms of aluminium output. SUAL(known as Siberian-Urals Aluminium company),owned by Viktor Vekselberg was the second-largest aluminium producer in Russia and sixth-largest globally in terms of aluminium output.GLENCORE International AG was a Swiss-based commodities trader founded by Marc Rich. In 2005, RUSAL and SUAL individually produced 2.7 and 1.05 million tonnes respectively. With GLENCORE added into the mix, the merged entity would set to become the world’s largest aluminium producer with output of 4 million tones per year. The merged entity would surpass the likes of Alcoa Inc. of USA and Alcan Inc. of Canada in terms of global aluminium output and would have 100% monopoly in the Russian aluminium market. Analysts were skeptical whether, the merged entity within a few years, could rise to become one of the main mining companies globally touching the standards set by Australia’s BHP Billiton and Britain’s Rio Tinto.

Pedagogical Objectives:

• To understand the role of mergers and acquisitions in the growth strategy of the aluminium companies
• To analyse the benefits and drawbacks of mergers and acquisitions associated with aluminium companies
• To study the impact of consolidation in the Russian aluminium sector
• To understand the potential synergies of the consolidation in the Russian aluminium sector.

Keywords :  Mergers,Acquisitions,Alliances Case Study;RUSAL; SUAL; GLENCORE International AG; Alcan; Alcoa; BHP Billiton; Rio Tinto; Global aluminium industry; Russian aluminium industry; Falconbridge; Xstrata