Alcoa Offers $2.2 Bln To Buy Alumina

(RTTNews) - Alcoa (AA) said that it has reached an agreement with Alumina Limited (AWC.AX) on terms and process for the acquisition of Alumina Limited.

As per the all-scrip, or all-stock, transaction, Alumina Limited shareholders would receive consideration of 0.02854 Alcoa shares for each Alumina Limited share. Based on Alcoa's closing share price as of February 23, 2024, the Agreed Ratio implies an equity value of about $2.2 billion for Alumina Limited.

Upon completion of the agreement, Alumina Limited shareholders would own 31.25 percent, and Alcoa shareholders would own 68.75 percent of the combined company.

In a separate press release, Alumina Limited confirmed that it has received a non-binding, indicative and conditional proposal from Alcoa to acquire 100% of the ordinary shares on issue in Alumina via a scheme of arrangement, for scrip consideration of 0.02854 shares of Alcoa common stock for each Alumina share. The proposal is at a 13.1% premium to the share price of Alumina on 23 February 2024.

Alcoa noted that Alumina's board intends to recommend the agreed Ratio in the absence of a superior proposal and subject to an independent expert concluding that the transaction is in the best interests of Alumina Limited shareholders.

As part of the proposed transaction, Alcoa would apply to establish a secondary listing on the Australian Securities Exchange to allow Alumina Limited shareholders to trade Alcoa common stock via CHESS Depositary Interests on the Australian Securities Exchange.

Under the terms of the Agreement, two new mutually agreed upon directors from Alumina Limited's Board would be appointed to Alcoa's Board of Directors upon closing.

Alumina Limited's largest holder, Allan Gray Australia, has entered into an agreement with Alcoa that gives Alcoa the right to acquire up to 19.9 percent of Alumina Limited at the Agreed Price 0.02854 Alcoa shares for each Alumina Limited share. The conditional share sale agreement will be disclosed in a substantial holder notice to be released to ASX.

Alcoa is the sole operator of Alcoa World Alumina and Chemicals or AWAC, a joint venture with Alumina Limited. AWAC consists of a number of affiliated entities that own, operate or have an interest in bauxite mines and alumina refineries in Australia, Brazil, Spain, Saudi Arabia and Guinea. AWAC also has a 55 percent interest in an aluminum smelter in Victoria, Australia. Alcoa owns 60 percent and Alumina Limited owns 40 percent of the AWAC entities, respectively, directly, or indirectly.