Alcoa Announces Update on Acquisition of Alumina Limited
Alcoa has entered into an Amended Scheme of Implementation Deed with Alumina regarding their acquisition. The updated agreement maintains the originally announced consideration of 0.02854 New Alcoa CDIs per share of Alumina The transaction is on track to complete in Q3 2024 and includes the support of significant stakeholders like Allan Gray Australia. CITIC, which holds a stake in Alumina , will receive part of its consideration in non-voting convertible series A preferred stock to comply with U.S. regulations. Required approvals include those from Australia's Foreign Investment Review Board and Brazil's antitrust regulator, with the Australian Competition and Consumer Commission opting out of a public review.
- Maintains previously announced Scheme Consideration of 0.02854 New Alcoa CDIs per share.
- Transaction is on schedule for Q3 2024 completion.
- Continued support from Allan Gray Australia Pty , a major shareholder.
- CITIC compliance with U.S. regulations through non-voting convertible series A preferred stock.
- Australian Competition and Consumer Commission will not conduct a public review.
- Transaction not conditional on due diligence or financing, reducing uncertainty.
- Economic rights of New Alcoa Non-Voting Shares are equivalent to New Alcoa CDIs.
- Subject to customary conditions and required regulatory approvals, which may cause delays.
- Potential dilution of Alcoa common stock with issuance of New Alcoa CDIs.
- Regulatory risks in securing approvals from Australia's Foreign Investment Review Board and Brazil's antitrust regulator.
Insights
The updated agreement between Alcoa and Alumina Limited indicates substantial progress towards finalizing the acquisition. The agreed ratio of 0.02854 New Alcoa CDIs per Alumina share and the inclusion of non-voting shares for CITIC to comply with regulatory requirements highlight Alcoa's strategic flexibility and commitment to closing the deal.
From a financial standpoint, the transaction is designed to be both smooth and compliant, further ensuring that stakeholders' interests are safeguarded. The confirmation of Allan Gray Australia Pty Ltd's support, being the largest substantial holder in Alumina Limited, is important because it mitigates potential opposition and strengthens investor confidence in the transaction's completion.
Short-term, investors can expect market adjustments as the acquisition approaches completion, potentially reflecting optimism and speculative trading. Long-term, the merger could bring about operational efficiencies and synergies, possibly enhancing Alcoa's market position and profitability. However, investors should be cautious about the integration risks and the execution of strategic goals post-acquisition.
The issuance of non-voting convertible series A preferred stock to CITIC due to the Bank Holding Company Act of 1956 reveals a well-considered legal strategy aimed at ensuring compliance with U.S. regulations. This move prevents regulatory obstacles, which could otherwise delay or complicate the acquisition process.
Additionally, securing regulatory approvals from entities such as Australia's Foreign Investment Review Board and Brazil's antitrust regulator is pivotal. The Australian Competition and Consumer Commission's decision not to conduct a public review further smoothens the path, indicating there are no significant competitive concerns.
For retail investors, this adherence to legal and regulatory mandates reduces the risk of potential legal entanglements, ensuring a more predictable and transparent acquisition process. Nevertheless, they should remain informed about any forthcoming regulatory decisions that could impact the transaction timeline or structure.
The acquisition of Alumina Limited by Alcoa, with the support of major stakeholders like Allan Gray Australia Pty Ltd, suggests a strong strategic move within the aluminum industry. By merging, Alcoa might be aiming to consolidate its market presence, optimizing its supply chain and potentially achieving cost efficiencies through scale.
Given the global demand for aluminum, driven by sectors like automotive, aerospace and construction, this acquisition positions Alcoa to better capitalize on market opportunities. The ability for Alumina Limited shareholders to trade Alcoa common stock via the New Alcoa CDIs listed on ASX also opens up liquidity and investment diversification options for Australian investors.
Retail investors should be mindful of market dynamics and potential reactions to the acquisition. While the long-term prospects appear positive, the initial market response might include volatility as stakeholders reassess valuations and strategic implications.
Alcoa and Alumina enter into Amended Scheme of Implementation Deed
Allan Gray Australia reiterates support of the Transaction
Transaction remains on schedule for completion in the third quarter 2024
The Amendment is the result of cooperative discussions with all parties – including CITIC Group (“CITIC”), which holds or controls through its affiliates an
Alcoa and Alumina Limited have amended the Agreement whereby an affiliate of CITIC will receive a small proportion, approximately 1.5 percent of the pro forma outstanding Alcoa common stock, of its consideration under the Scheme in non-voting convertible series A preferred stock (par value
The New Alcoa Non-Voting Shares will be issued to enable CITIC to comply with the Bank Holding Company Act of 1956, which prohibits CITIC, as the owner of certain banking assets in
“The agreed change to the Scheme brings us a step closer to completing the transaction, which will provide significant and long-term benefits to both Alcoa and Alumina Limited shareholders,” said William F. Oplinger, President and CEO of Alcoa.
Allan Gray Australia Continues to Support the Scheme
Allan Gray Australia Pty Ltd, currently the largest substantial holder in Alumina Limited, has confirmed that it continues to be supportive of the Scheme. In light of that confirmation, Alcoa and Allan Gray Australia Pty Ltd have terminated their Conditional Share Sale Agreement in accordance with its terms.
Transaction Timing & Conditions
The transaction is expected to be completed in the third quarter 2024, subject to the satisfaction of customary conditions as well as approval by both companies’ shareholders and receipt of required regulatory approvals. The required regulatory approvals include approvals from Australia’s Foreign Investment Review Board and Brazil’s antitrust regulator. The Australian Competition and Consumer Commission has indicated it does not intend to conduct a public review of the Scheme. The transaction is not conditional on due diligence or financing.
Transaction Website
Associated materials regarding the transaction are available on the investor relations section of Alcoa’s website at www.alcoa.com 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.
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 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 non-satisfaction or non-waiver, on a timely basis or otherwise, of one or more closing conditions to the proposed transaction; (2) the prohibition or delay of the consummation of the proposed transaction by a governmental entity; (3) the risk that the proposed transaction may not be completed in the expected time frame or at all; (4) unexpected costs, charges or expenses resulting from the proposed transaction; (5) uncertainty of the expected financial performance following completion of the proposed transaction; (6) failure to realize the anticipated benefits of the proposed transaction; (7) the occurrence of any event that could give rise to termination of the proposed transaction; (8) 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; (9) the impact of global economic conditions on the aluminum industry and aluminum end-use markets; (10) 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; (11) the disruption of market-driven balancing of global aluminum supply and demand by non-market forces; (12) competitive and complex conditions in global markets; (13) our ability to obtain, maintain, or renew permits or approvals necessary for our mining operations; (14) rising energy costs and interruptions or uncertainty in energy supplies; (15) unfavorable changes in the cost, quality, or availability of raw materials or other key inputs, or by disruptions in the supply chain; (16) 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; (17) our ability to integrate and achieve intended results from joint ventures, other strategic alliances, and strategic business transactions; (18) economic, political, and social conditions, including the impact of trade policies and adverse industry publicity; (19) fluctuations in foreign currency exchange rates and interest rates, inflation and other economic factors in the countries in which we operate; (20) changes in tax laws or exposure to additional tax liabilities; (21) global competition within and beyond the aluminum industry; (22) our ability to obtain or maintain adequate insurance coverage; (23) disruptions in the global economy caused by ongoing regional conflicts; (24) legal proceedings, investigations, or changes in foreign and/or
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 2024 annual meeting of stockholders, which was filed with the SEC on March 19, 2024 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1675149/000119312524071354/d207257ddef14a.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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240520307531/en/
Investor Contact:
Jim Dwyer
James.Dwyer@alcoa.com
Media Contact:
Courtney Boone
Courtney.Boone@alcoa.com
Additional Media Contacts
Citadel MAGNUS
Paul Ryan +61 409 296 511
pryan@citadelmagnus.com
Joele Frank, Wilkinson Brimmer Katcher
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Alcoa-jf@joelefrank.com
Source: Alcoa
FAQ
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