Spin-offs Case Study

Novelis, Alcan's Spin-off: Staying Competitive?

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Abstract:
In January 2005, Alcan, the Canadian aluminium company, spun-off its rolled products business into an independent company, Novelis. The Spin off was required for Alcan to receive an antitrust approval from the European Union after its acquisition of a French company, Pechinery. Novelis supplies rolled products for use in food and beverage, can production, food packaging foils as well as automotive parts. In 2004, with customers like Jaguar, Ford, Mercedes, Reaxam and Kodak Polychrome Graphics, Novelis generated sales of $7.8 billion. However, it is mired with problems like a debt of $2.95 billion, rising energy costs and metal price ceilings in some of its sales contracts.

Pedagogical Objectives:

• To highlight the rationale behind the Spin off of Novelis from Alcan
• To discuss the competitive strategies of Novelis in the global rolled products business

Keywords : Alcan; Novelis; Spin off; Competitive strategy; Restructuring / Turnaround Strategies Case Study; Flat-rolled aluminium market; Aluminium production; US; GM (General Motors); Mercedes; Jaguar Cars Limited; Metal price ceiling; Canada

Contents : 
The Inception of Novelis: Spin-off from Alcan
Staying Competitive?
Financial Data of Novelis
World’s Largest Supplier of Rolled Products
Novelis: Global Presence
Financial and Operating Data of Novelis