U.S.-based Alcoa has announced a $2.2 billion all-stock proposal to acquire its Australian joint venture partner, Alumina. This strategic move aims to consolidate Alcoa's upstream operations and simplify its corporate structure, providing greater control over the Alcoa World Alumina and Chemicals (AWAC) venture. AWAC, a significant player in bauxite mining and alumina refining, operates across multiple continents including Australia, Brazil, and Spain.
Alcoa's CEO, William Oplinger, highlighted the financial and operational benefits of the deal, including the elimination of Alumina's annual overhead costs and potential tax advantages. The proposed exchange rate would grant Alumina shareholders a 31% stake in the merged entity, valuing Alumina shares at A$1.15 each based on Alcoa's recent closing price.
Alumina's board has shown support for the proposal, barring any better offers, though it remains open to further negotiations. Alumina's largest shareholder, Allan Gray Australia, which holds a nearly 20% stake, has agreed to the sale, citing the deal's potential to streamline the companies' operations.
AWAC's interests extend to the Portland aluminum smelter in Australia, co-owned with China's CITIC Resources and Japan's Marubeni. CITIC, as Alumina's second-largest shareholder, has yet to publicly respond to the proposal.
Analysts at Jefferies believe the transaction is strategically sound, though they note the premium offered is relatively modest compared to typical takeover bids. The alumina industry's current low-price environment and the planned closure of AWAC's Kwinana refinery add layers of complexity to the deal's timing and potential benefits.
