Norsk Hydro danced the samba when they were able to buy parts of Brazilian Vale. But in Rio, Brazilians are more concerned about their new Hydro control, which will be used to run Hydro better.
(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
Cheers. Sunday 2. In May, it was announced that Norsk Hydro is acquiring the aluminum business of Brazilian mining giant Vale.
Despite a price tag of almost NOK 30 billion, the largest acquisition a Norwegian company has ever made, the trade in the Norwegian media is described as "a bargain" for Hydro. "Hydro up in the elite series", was Aftenposten's title on Monday. "Hydro's biggest leap," wrote Dagens Næringsliv. "Great stuff," was the VG title.
Hydro has in fact secured access to aluminum raw materials in, as CEO Svein Richard Brandtzæg calls it, «a centenary perspective». It was celebrated with samba at the head office. Hydro will be among the largest in Europe in its class.
But under the Christ the Redeemer statue in Rio de Janeiro, smiles are also loose in the boardroom of Vale, which is already the world's largest iron producer, the world's second largest mining company and also number two as a nickel producer. Vale gets an ownership share of as much as 22 percent in Norsk Hydro, and thus becomes the largest owner after the Norwegian state. The Norwegian authorities thus own just over 10 per cent more than the Brazilians in what is considered to be the cornerstone of Norwegian industry over the past 100 years.
- Vale wants to be an important player, explains spokeswoman Fatima Cristina in Vale to Ny Tid.
- This gives us the right to a seat on Hydro's board, and with the board seat and this significant ownership share, Vale hopes to be able to contribute in the best possible way to growth in Hydro, says Cristina.
She emphasizes that Vale will continue to be a key player in aluminum through its stake in Hydro.
The Brazilians are favored
Only the aluminum production Hydro has secured from Vale. The giant company primarily produces iron, and just days before the Hydro trade, Vale bought iron licenses in Guinea for about NOK 15 billion. The company already owns a ferroalloy plant in Mo i Rana. What does it mean for Hydro to get the Brazilian giant heavily on the field?
- Historically, Norsk Hydro has been a management-controlled company. The state has had a "hands off" relationship with the government, except in some symbolic cases. At the same time, Hydro and Vale are already very integrated, so I do not think there will be any major changes in the governance system, says social economist Leo Andreas Grünfeld in the Norwegian business strategy company Menon Business Economics.
Brazil, along with China and India, has the world's fastest growing economies. Grünfeld nevertheless believes that one should be careful about seeing trade in connection with it.
- These are international companies in question, and even though the state is an owner, Norwegian politics is unlikely to play any role in this acquisition, he says.
- Who really should rub their hands here? Hydro or Vale?
- Such a trade is most often favored by the company that is acquired (here: Vale, editor's note). This is shown by the fact that there was no significant increase in the Hydro share after the acquisition became known, Grünfeld explains.
No belief in arguing
Hydro envisages a long-term collaboration with the mining giant, and has at the same time secured itself against Vale selling out of the company within two years. Therefore, the leader of the Storting's business committee, Terje Aasland (Labor Party), has only praise for the agreement.
- This was a very important step for Hydro. The challenge has been to secure the supply of raw materials, and the acquisition gives control over the raw material situation. This indicates further growth, which also means that Norway's industry can be given much-needed investments.
Even though Vale comes in as a large owner at the same time as the state's ownership becomes smaller, Aasland thinks it is justifiable.
- We have secured our ownership, at the same time as we put the company in a position for further growth. Exactly the percentages are less decisive, but it is clear that it is important for us to have a good ownership position, says Aasland in the Labor Party.
