SYDNEY: Alumina producer Alcoa Corp has entered exclusive takeover talks with Australian joint-venture partner Alumina Ltd, after making a US$2.2bil offer.
Alcoa has proposed a deal offering 0.02854 of its shares for each of Alumina’s, the company said yesterday, marking a 13.1% premium to its share price on Feb 23.
The Australian company’s board said it plans to support the offer if the sides get to a definitive agreement following further discussions.
Alcoa also agreed to buy a 19.9% stake in Alumina from biggest shareholder Allan Gray Australia.
Alumina owns about 40% of of Alcoa World Alumina and Chemicals, the world’s largest producer of the metal, through a joint venture with Alcoa.
If approved, the takeover will increase its exposure to Tier-1 bauxite and alumina businesses, and boost its global position as a pure-play upstream aluminum producer, the American company said in a separate statement.
“We recognise the value creation opportunities possible under a simplified ownership structure, including the ability to implement AWAC’s operational and strategic decisions on an accelerated basis,” Alcoa chief executive officer William F. Oplinger said.
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“We believe now is the right time to consolidate ownership in AWAC.”
Alumina’s shares rose as much as 9.3% in early trading in Sydney yetserday, and were up 6.4% to A$1.085.
Alcoa’s takeover offer comes about five months after the US aluminum producer appointed Oplinger amid struggles with operational and permitting setbacks in Australia for its bauxite mining business.
Those problems forced Alcoa to warn investors that it now plans to mine lower-grades of the bauxite, a key raw material needed to make aluminum, in Western Australia until it gets to its next mining phase, which could be around 2027.
The firm halted production at its Kwinana alumina plant in the region as part of cost-cutting measures. — Bloomberg