Alcoa announced that it has signed a binding plan implementation agreement with Alumina Co., Ltd. to acquire the latter through an all-share transaction, with a valuation of approximately US$2.2 billion.
The Zhitong Finance App learned that Aluminum (AA.US) announced that it has signed a binding plan implementation agreement with Alumina Limited (AWCMY.US) to acquire the latter through an all-stock transaction, with a valuation of about US$2.2 billion.
The board of directors of Alumina Co., Ltd. recommended that the company's shareholders vote in favor of the agreement without a better plan, and independent experts concluded that the transaction was in the best interest of Alumina Co., Ltd. shareholders.
According to the terms of the agreement, Alumina Co., Ltd. shareholders will receive 0.02,854 Alcoa shares for every 1 Alumina Co., Ltd. share they hold. After the transaction is completed, Alumina Co., Ltd. shareholders will hold 31.25% of the consolidated company's shares, and Alcoa shareholders will hold 68.75% of the shares.
According to Alcoa's closing price as of February 23, 2024 (the last trading day before the announcement of the plan implementation agreement), the agreement ratio means that Alumina Co., Ltd. is worth 1.15 Australian dollars per share, and Alumina Limited's share value is about US$2.2 billion.
Additionally, after the transaction is completed, two new Australian directors of Alumina Limited's board will be appointed as members of Alcoa's board of directors.
According to the terms of the agreement and in response to Alumina Co., Ltd.'s request, Alcoa has agreed to provide short-term liquidity support to Alumina Co., Ltd. to finance AWAC joint venture equity subscriptions when Alumina Co., Ltd.'s net debt position exceeds US$420 million. According to AWAC's current 2024 cash flow forecast, Alcoa is not expected to require any support in 2024. If the transaction is not completed, Alumina Limited will be required to pay its share subscription (plus accrued interest) by September 1, 2025.
Allan Gray Australia, the current largest actual shareholder of Alumina Limited, has confirmed that it will continue to support the proposed deal.
The deal is expected to close in the third quarter of 2024, subject to customary conditions being met and approval from the shareholders of both companies and required regulatory approvals. Required regulatory approvals include approval from the Australian Foreign Investment Review Board and Australian and Brazilian antitrust regulators. The deal was not contingent on due diligence or financing.