Alcoa Corporation (AA) is seeing its shares rise after announcing a binding agreement to sell its 25.1% ownership in the Ma’aden Joint Venture to the Saudi Arabian Mining Company (Ma’aden) for approximately $1.1 billion. This deal involves the transfer of around 86 million Ma’aden shares, valued at $950 million based on the 30-day volume-weighted average price as of September 12, 2024, along with $150 million in cash.
The 2009 Saudi joint venture includes Ma’aden Bauxite and Alumina Company (MBAC) and Ma’aden Aluminium Company (MAC). Alcoa’s 25.1% stake in the joint venture was valued at $545 million as of June 30, 2024.
The agreement dictates that Alcoa will retain its Ma’aden shares for a minimum of three years, with one-third becoming transferable after the third, fourth, and fifth anniversaries of the transaction’s closing. During this holding period, Alcoa has the flexibility to hedge or borrow against its shares. Under specific conditions, the holding period could be shortened. Following the transaction, Alcoa will hold approximately 2% of Ma’aden’s outstanding shares.
The transaction is subject to regulatory approvals, Ma’aden shareholder approval, and other customary conditions, with an anticipated closing in the first half of 2025.
William F. Oplinger, Alcoa’s President and CEO, highlighted the positive impact of the transaction, stating, “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.”
Bob Wilt, Ma’aden’s CEO, echoed this sentiment, emphasizing the longstanding partnership, “Since 2009, Alcoa has been a valued partner of Ma’aden, and our aluminium business has benefited substantially from our strategic partnership.”
Alcoa closed the second quarter with a cash balance of $1.49 billion. Investors interested in gaining exposure to Alcoa can explore the Macquarie ETF Trust Macquarie Energy Transition ETF (PWR) and SPDR S&P Metals & Mining ETF (XME).
As of Monday’s premarket trading, AA shares are up 1.45% at $32.99.
