- Transaction would further enhance Alcoa’s position as of one of
the world’s largest bauxite and alumina producers with increased
ownership of core, tier-1 assets
- Transaction would provide Alumina Limited shareholders the
opportunity to participate in the upside potential of a stronger,
better-capitalized company with a larger, more diversified
portfolio
- Transaction would result in significant and long-term value
creation for both companies’ shareholders from greater operational
flexibility
- Alumina Limited’s largest holder, Allan Gray Australia, has
entered into an agreement with Alcoa which gives Alcoa the right to
acquire up to 19.9% of Alumina Limited’s issued share capital
- Investor conference call scheduled for today, February 25, 2024
at 6:00 p.m. ET / February 26, 2024 at 10:00 a.m. AEDT
Alcoa (NYSE: AA or “Alcoa”) today announced that it has
entered into an agreement with Alumina Limited (ASX: AWC) on terms
and process for the acquisition of Alumina Limited, subject to
entry into a scheme implementation agreement.
Alcoa and Alumina Limited have entered into an exclusivity and
transaction process deed (“Process Deed”), and the Alumina
Limited Board of Directors has confirmed that, subject to entry
into a scheme implementation agreement, it intends to recommend the
transaction to Alumina Limited shareholders. Under the all-scrip,
or all-stock, transaction, Alumina Limited shareholders would
receive consideration of 0.02854 Alcoa shares for each Alumina
Limited share (the “Agreed Ratio”). Based on Alcoa’s closing
share price as of February 23, 2024, the Agreed Ratio implies an
equity value of approximately $2.2 billion for Alumina Limited.
The Alumina Limited Board of Directors intends to recommend the
Agreed Ratio in the absence of a superior proposal and subject to
an independent expert concluding (and continuing to conclude) that
the transaction is in the best interests of Alumina Limited
shareholders.
Under the Process Deed, Alcoa and Alumina Limited intend to
finalize and enter into a scheme implementation agreement for the
all-scrip transaction (the “Agreement”). Upon completion of
the Agreement, Alumina Limited shareholders would own 31.25
percent, and Alcoa shareholders would own 68.75 percent of the
combined company.1
Alcoa is the sole operator of Alcoa World Alumina and Chemicals
(AWAC), a joint venture (“JV”) with Alumina Limited. AWAC
consists of a number of affiliated entities that own, operate or
have an interest in bauxite mines and alumina refineries in
Australia, Brazil, Spain, Saudi Arabia and Guinea. AWAC also has a
55 percent interest in an aluminum smelter in Victoria, Australia.
Alcoa owns 60 percent and Alumina Limited owns 40 percent of the
AWAC entities, respectively, directly, or indirectly.
The Agreement would increase Alcoa’s economic interest in its
core business and simplify governance by acquiring the minority
partner in its AWAC JV, resulting in greater operational
flexibility and strategic optionality. It would also allow Alumina
Limited shareholders to participate in the upside potential of a
stronger, better-capitalized company with a larger and more
diversified portfolio while offering exposure to Alcoa’s upstream
aluminum business.
Executive Commentary
“We are pleased to have entered into the transaction process and
exclusivity deed to finalize the terms of the transaction, which
will provide significant and long-term benefits to both Alcoa and
Alumina Limited shareholders,” said William F. Oplinger, Alcoa’s
President and CEO. “Alcoa has been a proven operator of AWAC, and
we recognize 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.
We believe now is the right time to consolidate ownership in AWAC
and look forward to working closely with the Alumina Limited team
to consummate a transaction that will better position Alcoa to
execute on our long-term growth strategy.”
Mr. Oplinger continued, “This acquisition would build on our
commitment to Western Australia, and provides significant benefits
to employees, customers, host communities, and others who rely on
the continuing success of our global business.”
Compelling Strategic and Financial Benefits
- Increases Alcoa’s exposure to its core, tier-1 bauxite and
alumina business, and provides Alumina Limited shareholders with
exposure to Alcoa’s global aluminum business. The acquisition
of Alumina Limited would consolidate Alcoa’s ownership of one of
the world’s largest bauxite and alumina producers with tier 1
assets. With this acquisition, Alcoa would significantly increase
its ownership in five of the 20 largest bauxite mines and five of
the 20 largest alumina refineries globally (excluding China).2 This
complements Alcoa’s low carbon, global smelting portfolio that has
the fifth largest global production (excluding China).3
Importantly, Alumina Limited shareholders gain access to the
benefits of Alcoa’s upstream aluminum business.
- Enhances Alcoa’s global position as the leading pure-play
upstream aluminum company. A combination of Alcoa and Alumina
Limited would enhance Alcoa’s vertical integration across the value
chain, with leading positions across bauxite, alumina and aluminum
smelting and casting, excluding China. AWAC's mining operations are
strategically located in proximity to AWAC refineries and major
Atlantic and Pacific markets. Alcoa’s smelters are strategically
located proximate to key markets in North America and Europe. The
increased vertical integration in a combined company also provides
more stability throughout the commodity cycle.
- Offers Alumina Limited shareholders ownership in a stronger,
well-capitalized business. With ownership of the combined
entity, Alumina Limited shareholders will exchange their shares in
a non-operating passive investment vehicle for an ownership
position in Alcoa. As part of this transition, Alumina Limited
shareholders would participate in Alcoa’s capital returns program,
including the current dividend, and would have access to a larger,
strong balance sheet that will be better able to fund portfolio
actions, maintenance capital, and growth capital.
- Simplifies corporate structure and governance, resulting in
greater operational flexibility and strategic optionality.
Having 100 percent ownership of AWAC simplifies the corporate
structure and allows for a more efficient operating model. With a
centralized management team and strategy, Alcoa will be better
positioned to execute operational and strategic decisions on an
accelerated basis. In addition, a simplified corporate structure
will result in efficiencies through a reduction in corporate
costs.
- Bolsters long-term financial profile and maximizes value
creation for both companies’ shareholders. The proposed
transaction would increase Alcoa's financial flexibility, enabling
more efficient funding and capital allocation decisions, as well as
liability management. Alcoa would be better positioned to achieve
many of the Company’s long-term strategies to maximize value
creation for shareholders. These being: returning cash to
shareholders, increasing portfolio exposure to what has been
Alcoa’s highest margin and highest return on capital business
historically, and positioning for growth with the ability to make
decisions on a streamlined basis. Additionally, an acquisition of
Alumina Limited increases Alcoa’s financial flexibility for its
Western Australia mining projects and near-term portfolio
actions.
- Reaffirms Alcoa’s commitment to Western Australia – a
premier global mining jurisdiction. Alcoa has a long track
record in the tier-1 Western Australia mining jurisdiction. The
proposed acquisition of Alumina Limited builds on Alcoa’s
commitment to continued productive relationships built on
engagement with local communities, significant employment, and
improved environmental performance. The proposed acquisition would
better position Alcoa to continue its long-term plan of investing
in Australian bauxite mining and alumina refining.
Transaction Details
Under the proposed all-scrip, or all-stock, Agreement, Alumina
Limited shareholders would receive consideration of 0.02854 Alcoa
shares for each Alumina Limited share.4 This consideration would
imply a value of A$1.15 per Alumina Limited share, based on Alcoa’s
closing share price on the NYSE as of February 23, 2024 of $26.52.5
This represents a premium of 13.1% to the closing price of Alumina
Limited’s shares on February 23, 2024.
As part of the proposed transaction, Alcoa would apply to
establish a secondary listing on the Australian Securities Exchange
("ASX") to allow Alumina Limited shareholders to trade Alcoa
common stock via CHESS Depositary Interests ("CDIs") on the
ASX.
Under the terms of the Agreement, two new mutually agreed upon
directors from Alumina Limited’s Board would be appointed to
Alcoa’s Board of Directors upon closing.
Conditional Share Sale Agreement with
Allan Gray Australia
Alumina Limited’s largest holder, Allan Gray Australia, has
entered into an agreement with Alcoa that gives Alcoa the right to
acquire up to 19.9 percent of Alumina Limited at the Agreed Price
0.02854 Alcoa shares for each Alumina Limited share. The
conditional share sale agreement will be disclosed in a substantial
holder notice to be released to ASX.
Transaction Conditions
The transaction would be subject to the satisfaction of certain
customary conditions and regulatory approval, including entry into
a scheme implementation agreement, a recommendation from Alumina
Limited’s Board of Directors that Alumina Limited shareholders vote
in favor in the absence of a superior proposal, and an independent
expert concluding (and continuing to conclude) that the proposed
transaction is in the best interests of Alumina Limited's
shareholders, approval by Australia's Foreign Investment Review
Board, Alumina Limited's shareholders approving the transaction and
Alcoa shareholders approving the issue of the new Alcoa shares
under the NYSE rules. The transaction is not conditional on due
diligence or financing.
The parties expect to be in a position to announce a scheme
implementation agreement detailing the full details of the
transaction in the near-term.
Transaction Website
Associated materials regarding the transaction will be available
on the investor relations section of Alcoa's website as well as a
transaction website at www.strongawacfuture.com.
Advisors
J.P. Morgan Securities LLC and UBS Investment Bank are acting as
financial advisors to Alcoa, and Ashurst and Davis Polk &
Wardwell LLP are acting as its legal counsel.
Conference Call
Alcoa will hold a conference call at 6:00 p.m. Eastern Time (ET)
on Sunday, February 25, 2024 (10:00 a.m. AEDT on Monday, February
26, 2024), to discuss today’s announcement.
The call will be webcast via the Company’s homepage on
www.alcoa.com. Presentation materials for the call will be
available for viewing on the same website prior to the call. The
conference may also be accessed by calling 1-844-763-8274
(international callers dial 1-412-717-9224). Participants may
preregister for the conference call at
https://dpregister.com/sreg/10186845/fbb5eeb996.
About Alcoa Corporation
Alcoa (NYSE: AA) is a global industry leader in bauxite, alumina
and aluminum products with a vision to reinvent the aluminum
industry for a sustainable future. With a values-based approach
that encompasses integrity, operating excellence, care for people
and courageous leadership, our purpose is to Turn Raw Potential
into Real Progress. Since developing the process that made aluminum
an affordable and vital part of modern life, our talented Alcoans
have developed breakthrough innovations and best practices that
have led to greater efficiency, safety, sustainability and stronger
communities wherever we operate.
Dissemination of Company Information
Alcoa intends to make future announcements regarding company
developments and financial performance through its website,
www.alcoa.com, as well as through press releases, filings with the
Securities and Exchange Commission, conference calls and webcasts.
The Company does not incorporate the information contained on, or
accessible through, its corporate website into this press
release.
Forward-Looking Statements
This communication contains statements that relate to future
events and expectations and as such constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include those
containing such words as “aims,” “ambition,” “anticipates,”
“believes,” “could,” “develop,” “endeavors,” “estimates,”
“expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,”
“potential,” “plans,” “projects,” “reach,” “seeks,” “sees,”
“should,” “strive,” “targets,” “will,” “working,” “would,” or other
words of similar meaning. All statements by Alcoa Corporation
(“Alcoa”) that reflect expectations, assumptions or projections
about the future, other than statements of historical fact, are
forward-looking statements, including, without limitation,
statements regarding the proposed transaction; the ability of the
parties to negotiate, enter into and complete the proposed
transaction; the expected benefits of the proposed transaction, the
competitive ability and position following completion of the
proposed transaction; forecasts concerning global demand growth for
bauxite, alumina, and aluminum, and supply/demand balances;
statements, projections or forecasts of future or targeted
financial results, or operating performance (including our ability
to execute on strategies related to environmental, social and
governance matters); statements about strategies, outlook, and
business and financial prospects; and statements about capital
allocation and return of capital. These statements reflect beliefs
and assumptions that are based on Alcoa’s perception of historical
trends, current conditions, and expected future developments, as
well as other factors that management believes are appropriate in
the circumstances. Forward-looking statements are not guarantees of
future performance and are subject to known and unknown risks,
uncertainties, and changes in circumstances that are difficult to
predict. Although Alcoa believes that the expectations reflected in
any forward-looking statements are based on reasonable assumptions,
it can give no assurance that these expectations will be attained
and it is possible that actual results may differ materially from
those indicated by these forward-looking statements due to a
variety of risks and uncertainties. Such risks and uncertainties
include, but are not limited to: (1) the outcome of any discussions
between Alcoa and Alumina Limited with respect to the proposed
transaction, including the possibility that the parties will not
agree to pursue a transaction or that the terms of any such
transaction will be materially different from those described
herein, (2) the non-satisfaction or non-waiver, on a timely basis
or otherwise, of one or more closing conditions to the proposed
transaction; (3) the prohibition or delay of the consummation of
the proposed transaction by a governmental entity; (4) the risk
that the proposed transaction may not be completed in the expected
time frame or at all; (5) unexpected costs, charges or expenses
resulting from the proposed transaction; (6) uncertainty of the
expected financial performance following completion of the proposed
transaction; (7) failure to realize the anticipated benefits of the
proposed transaction; (8) the occurrence of any event that could
give rise to termination of the proposed transaction; (9) potential
litigation in connection with the proposed transaction or other
settlements or investigations that may affect the timing or
occurrence of the contemplated transaction or result in significant
costs of defense, indemnification and liability; (10) the impact of
global economic conditions on the aluminum industry and aluminum
end-use markets; (11) volatility and declines in aluminum and
alumina demand and pricing, including global, regional, and
product-specific prices, or significant changes in production costs
which are linked to LME or other commodities; (12) the disruption
of market-driven balancing of global aluminum supply and demand by
non-market forces; (13) competitive and complex conditions in
global markets; (14) our ability to obtain, maintain, or renew
permits or approvals necessary for our mining operations; (15)
rising energy costs and interruptions or uncertainty in energy
supplies; (16) unfavorable changes in the cost, quality, or
availability of raw materials or other key inputs, or by
disruptions in the supply chain; (17) our ability to execute on our
strategy to be a lower cost, competitive, and integrated aluminum
production business and to realize the anticipated benefits from
announced plans, programs, initiatives relating to our portfolio,
capital investments, and developing technologies; (18) our ability
to integrate and achieve intended results from joint ventures,
other strategic alliances, and strategic business transactions;
(19) economic, political, and social conditions, including the
impact of trade policies and adverse industry publicity; (20)
fluctuations in foreign currency exchange rates and interest rates,
inflation and other economic factors in the countries in which we
operate; (21) changes in tax laws or exposure to additional tax
liabilities; (22) global competition within and beyond the aluminum
industry; (23) our ability to obtain or maintain adequate insurance
coverage; (24) disruptions in the global economy caused by ongoing
regional conflicts; (25) legal proceedings, investigations, or
changes in foreign and/or U.S. federal, state, or local laws,
regulations, or policies; (26) climate change, climate change
legislation or regulations, and efforts to reduce emissions and
build operational resilience to extreme weather conditions; (27)
our ability to achieve our strategies or expectations relating to
environmental, social, and governance considerations; (28) claims,
costs and liabilities related to health, safety, and environmental
laws, regulations, and other requirements, in the jurisdictions in
which we operate; (29) liabilities resulting from impoundment
structures, which could impact the environment or cause exposure to
hazardous substances or other damage; (30) our ability to fund
capital expenditures; (31) deterioration in our credit profile or
increases in interest rates; (32) restrictions on our current and
future operations due to our indebtedness; (33) our ability to
continue to return capital to our stockholders through the payment
of cash dividends and/or the repurchase of our common stock; (34)
cyber attacks, security breaches, system failures, software or
application vulnerabilities, or other cyber incidents; (35) labor
market conditions, union disputes and other employee relations
issues; (36) a decline in the liability discount rate or
lower-than-expected investment returns on pension assets; and (37)
the other risk factors discussed in Part I Item 1A of Alcoa’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2023 and other reports filed by Alcoa with the SEC. These risks, as
well as other risks associated with the proposed transaction, will
be more fully discussed in the proxy statement. Alcoa cautions
readers not to place undue reliance upon any such forward-looking
statements, which speak only as of the date they are made. Alcoa
disclaims any obligation to update publicly any forward-looking
statements, whether in response to new information, future events
or otherwise, except as required by applicable law. Market
projections are subject to the risks described above and other
risks in the market. Neither Alcoa nor any other person assumes
responsibility for the accuracy and completeness of any of these
forward-looking statements and none of the information contained
herein should be regarded as a representation that the
forward-looking statements contained herein will be achieved.
Additional Information and Where to Find It
This communication does not constitute an offer to buy or sell
or the solicitation of an offer to buy or sell any securities. This
communication relates to the proposed transaction. In connection
with the proposed transaction, Alcoa plans to file with the SEC a
proxy statement on Schedule 14A (the “Proxy Statement”). This
communication is not a substitute for the Proxy Statement or any
other document that Alcoa may file with the SEC and send to its
stockholders in connection with the proposed transaction. The
issuance of the stock consideration in the proposed transaction
will be submitted to Alcoa’s stockholders for their consideration.
The Proxy Statement will contain important information about Alcoa,
the proposed transaction and related matters. Before making any
voting decision, Alcoa’s stockholders should read all relevant
documents filed or to be filed with the SEC completely and in their
entirety, including the Proxy Statement, as well as any amendments
or supplements to those documents, when they become available,
because they will contain important information about Alcoa and the
proposed transaction.
Alcoa’s stockholders will be able to obtain a free copy of the
Proxy Statement, as well as other filings containing information
about Alcoa, free of charge, at the SEC’s website (www.sec.gov).
Copies of the Proxy Statement and other documents filed by Alcoa
with the SEC may be obtained, without charge, by contacting Alcoa
through its website at https://investors.alcoa.com/.
Participants in the Solicitation
Alcoa, its directors, executive officers and other persons
related to Alcoa may be deemed to be participants in the
solicitation of proxies from Alcoa’s stockholders in connection
with the proposed transaction. Information about the directors and
executive officers of Alcoa and their ownership of common stock of
Alcoa is set forth in the section entitled “Information about our
Executive Officers” included in Alcoa’s annual report on Form 10-K
for the fiscal year ended December 31, 2023, which was filed with
the SEC on February 21, 2024 (and which is available at
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/1675149/000095017024018069/aa-20231231.htm),
and in the sections entitled “Director Nominees” and “Stock
Ownership of Directors and Executive Officers” included in its
proxy statement for its 2023 annual meeting of stockholders, which
was filed with the SEC on March 16, 2023 (and which is available at
https://www.sec.gov/Archives/edgar/data/1675149/000119312523072587/d427643ddef14a.htm).
Additional information regarding the persons who may, under the
rules of the SEC, be deemed participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be included in the Proxy
Statement and other relevant materials to be filed with the SEC in
connection with the proposed transaction when they become
available. Free copies of these documents may be obtained as
described in the preceding paragraph.
__________________
1 Based on fully diluted shares
outstanding for Alcoa and Alumina Limited as of February 23,
2024.
2 Per Wood Mackenzie
3 Per Wood Mackenzie
4 Interests in Alcoa shares would be
delivered in the form of “CDIs” - Clearing House Electronic
Sub-register System Depositary Interests representing a unit of
beneficial ownership in a share of Alcoa common stock. CDIs are
tradeable on the Australian Stock Exchange (ASX).
5 Based on the prevailing AUD / USD
exchange rate of 0.656 as of February 23, 2024.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240225789976/en/
Investor Contact: James Dwyer James.Dwyer@alcoa.com
Media Contact: Jim Beck James.Beck@alcoa.com
Additional Media Contacts
Australia Citadel MAGNUS Paul Ryan +61 409 296 511
pryan@citadelmagnus.com
United States Joele Frank, Wilkinson Brimmer Katcher
Sharon Stern / Kaitlin Kikalo / Lyle Weston
Alcoa-jf@joelefrank.com
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