Alcoa has agreed to divest its entire ownership stake of 25.1% in mining and metals firm Saudi Arabian Mining Company (Ma’aden) joint venture (JV) to Ma’aden in a stock and cash deal worth around $1.1bn.
The consideration includes around 86 million shares of Ma’aden valued at $950m based on the volume-weighted average share price of Ma’aden for the last 30 calendar days as of 12 September 2024. It also comprises $150m in cash.
Under the terms of the binding share purchase and subscription agreement, Alcoa will retain its Ma’aden shares for a minimum of three years, with one-third of the shares becoming transferable after each of the third, fourth, and fifth anniversaries of the transaction’s closing.
During this holding period, Alcoa will have the option to hedge and borrow against its Ma’aden shares, with the possibility of shortening the holding period under certain conditions.
Following the transaction, Alcoa will hold approximately 2% of Ma’aden’s outstanding shares.
Alcoa president and CEO William Oplinger said: “We deeply value our partnership with Ma’aden. We are confident that under the new arrangement, MBAC and MAC are well-positioned for success.
“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.”
Established in 2009, the Ma’aden JV is a fully integrated mining complex in Saudi Arabia, encompassing the Ma’aden Bauxite and Alumina Company (MBAC) and the Ma’aden Aluminium Company (MAC).
The MBAC operates the bauxite mine and alumina refinery, while the MAC manages the aluminium smelter and casthouse.
Alcoa holds the minority stake in the JV while Ma’aden holds the remaining interest of 74.9%. As of 30 June 2024, the carrying value of Alcoa’s investment in the JV was $545m.
The transaction is aimed at simplifying Alcoa’s portfolio in Saudi Arabia and providing greater financial flexibility.
Besides, it will also streamline Ma’aden’s aluminium business operations.
Ma’aden CEO Bob Wilt said: “Since 2009, Alcoa has been a valued partner of Ma’aden, and our aluminium business has benefited substantially from our strategic partnership.
“We look forward to future opportunities to collaborate as we continue to build the mining sector into the third pillar of the Saudi economy.”
Contingent on regulatory approvals, Ma’aden shareholders’ consent and other customary conditions, the deal is expected to be completed in Q1 2025.
For the transaction, Citi is Alcoa’s exclusive financial adviser while White & Case offers legal counsel. SNB Capital Company is the financial adviser to Ma’aden and AS&H Clifford Chance acts as legal counsel.
In May this year, Ma’aden signed a definitive agreement and finalised terms to form a 50-50 JV with Ivanhoe Electric to explore copper, gold, nickel, silver, and other electric metals in Saudi Arabia.
As part of the agreement, Ma’aden agreed to invest $126.5m in Ivanhoe Electric to acquire nearly 10.2 million common shares of the latter, representing a stake of 9.9%.
