In a significant strategic maneuver, Alcoa Corporation has agreed to divest its entire stake in a partnership with Saudi Arabian Mining Company, otherwise known as Ma'aden. This transaction is structured as a combination of stock and cash, amounting to a substantial total of $1.1 billion. Alcoa's decision to sell is aimed at streamlining its business portfolio and enhancing the value visibility of its investments within Saudi Arabia. As part of this transaction, Alcoa will be transferring its 25.1% ownership stake in the joint venture, which is valued at approximately $950 million based on 86 million shares of Ma'aden stock as per last Thursday's closing prices, alongside an additional $150 million in cash.
Upon the completion of this transaction, these shares will represent about 2.21% of Ma'aden’s total share capital, as disclosed in a separate announcement from the Saudi mining firm. The joint venture, which has been operational since its establishment in Saudi Arabia in 2009, includes key assets such as a bauxite mining operation, an alumina refinery, as well as an aluminum smelter and casthouse facility.
With Ma'aden holding the majority stake at 74.9%, this reshuffling reflects Alcoa's strategic focus on enhancing its long-term competitiveness within the global aluminum market. William Oplinger, Alcoa's Chief Executive, emphasized that this transaction not only simplifies the company’s portfolio but also provides crucial financial leeway.
"The transaction simplifies our portfolio, enhances visibility in the value of our investment in Saudi Arabia, and provides greater financial flexibility for Alcoa, an important part of improving our long-term competitiveness," Oplinger stated. It is noteworthy that Alcoa’s shares experienced a 1.5% increase in premarket trading on the day following the announcement. The completion of the deal, however, is subject to regulatory approvals as well as consent from Ma'aden’s investors, with Alcoa anticipating closure in the first half of the upcoming year.
Ma'aden, on its part, has forecasted that the transaction may wrap up by the first quarter of 2025. Under the terms of the agreement, Alcoa is obliged to retain its Ma'aden shares for a minimum duration of three years. The structuring of the share transfer stipulates that one-third of the stock will become transferable at the conclusion of each of the subsequent three, four, and five years after the transaction is finalized.
As of June’s end, Alcoa has reported the carrying value of its investment in the joint venture to be around $545 million. In a notable earlier move during the year, Alcoa also announced a $2.2 billion all-stock deal to acquire its Australian joint venture partner, Alumina, as the company sought to consolidate its ownership over core bauxite and alumina tier 1 assets.
Alcoa has indicated that this transaction is expected to conclude within the current quarter, further reflecting its grasp on strategic asset management. Current Stock Information: Price: $33.00, Change: +0.48, Percent Change: +1.48..