Alcoa To Buy Alumina In $2.2 Bln All-stock Deal

(RTTNews) - Alcoa (AA) said that it has entered into a binding Scheme Implementation Deed with Alumina Limited (AWC.AX), valuing the company at $2.2 billion in an all-stock deal.

The Alumina Limited Board of Directors has recommended that Alumina Limited shareholders vote in favor of the Agreement 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 per the terms of the agreement, Alumina shareholders would receive consideration of 0.02854 Alcoa shares for each Alumina Limited share. Upon completion of the transaction, Alumina Limited shareholders would own 31.25 percent, and Alcoa shareholders would own 68.75 percent of the combined company.

Based on Alcoa's closing share price as of February 23, 2024, the last trading day prior to the announcement of the Process Deed, the Agreed Ratio implies a value of A$1.15 per Alumina Limited share and an equity value of about $2.2 billion for Alumina Limited.

In addition, two new mutually agreed upon Australian directors from Alumina Limited's Board would be appointed to Alcoa's Board of Directors upon closing of the transaction.

Under the terms of the Agreement and at Alumina's request, Alcoa has agreed to provide short-term liquidity support to Alumina Limited to fund equity calls made by the AWAC joint venture if Alumina Limited's net debt position exceeds $420 million. Based on AWAC's current 2024 cashflow forecast, Alcoa does not expect any support to be required in the 2024 calendar year. Alumina Limited would be required to pay its equity calls (plus accrued interest) not later than September 1, 2025 in the event the transaction is not completed.

Allan Gray Australia, currently the largest substantial holder in Alumina Limited, has confirmed it continues to be supportive of the proposed transaction.

The transaction is expected to be completed in the third quarter 2024, subject to the satisfaction of customary conditions as well as approval by both companies' shareholders and receipt of required regulatory approvals. The required regulatory approvals include approvals from Australia's Foreign Investment Review Board and from the antitrust regulators in Australia and Brazil. The transaction is not conditional on due diligence or financing.