Alcoa's Kwinana alumina refinery in Kwinana, Australia, on Wednesday, February 28, 2024. US aluminum producer Alcoa has made a $2.2 billion bid to acquire its Australian joint venture partner Alumina Limited to consolidate ownership of key upstream assets with long-term contracts. Demand for metal.
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Alcoa He will buy Alumina The all-stock deal values the Australian company at $2.2 billion and makes the American company one of the world's largest alumina and bauxite producers.
Alumina shares rose as much as 10.4% after Alcoa announced the deal on Monday, reaching their highest levels since August 2023. Alcoa shares rose 2.1% to $30.5 per share.
Alcoa's pursuit of its joint venture partner could be seen as a gamble for minerals that will be an important part of the transition to cleaner sources of energy.
The alumina purchase gives Alcoa full control of its joint venture, which is one of the world's largest producers of semi-processed aluminum. Aluminum is used to produce renewable infrastructure and electric vehicles.
The global mining sector has seen a spate of mergers and acquisitions recently despite growing concerns about the economic outlook of one of the world's largest metal buyers, China, and slowing electric vehicle sales in the United States.
“This could be profitable for both companies,” said Tim Waterer, chief market analyst at trading firm KCM Trade.
“The takeover bid could be viewed as a vote of confidence in the resources space despite the sector’s murky growth outlook.”
Takeover follows USA Steel A $14.9 billion purchase deal in Japan Nippon Steel And Newmont $15 billion acquisition of Australian gold mining company Newcrest.
After the deal, Alumina shareholders will own approximately 31.6% of the combined entity, while Alcoa shareholders will own 68.4%.
Alumina's Board of Directors, including the Managing Director and CEO, recommended that shareholders vote in favor of the transaction, in the absence of a superior proposal.
The deal comes months after Alcoa faced operational and permitting issues for its bauxite works in Australia. It also revealed in January plans to halt production at its Kwinana alumina plant in Western Australia in a move to control costs.
