Alumina Strikes Deal with Alcoa

Alumina Limited (ASX: AWC) has recently finalized a Scheme Implementation Deed (SID) with Alcoa Corporation, outlining a proposal for Alcoa to acquire all fully paid ordinary shares in Alumina. This acquisition, to be conducted through a scheme of arrangement, involves eligible Alumina shareholders receiving 0.02854 shares of Alcoa common stock for each Alumina share held, representing a 19.5% premium based on the average exchange ratio over the last year.

Ownership Structure and Governance

Upon completion, Alumina shareholders will own about 31.6% of the merged entity, with existing Alcoa shareholders holding approximately 68.4%. Additionally, Alcoa has agreed to list on the Australian Securities Exchange (ASX), facilitating trading for Alumina shareholders. Furthermore, two Australian-resident Alumina directors will join the Alcoa board post-Transaction.

Board Recommendation and Benefits

Alumina's board recommends shareholders vote in favor of the Transaction, contingent on ongoing endorsement by an independent expert. Notably, the combined entity offers several benefits, including unification of Alcoa World Alumina and Chemicals (AWAC) ownership, increased exposure to the aluminum market, enhanced capital structure, and strategic flexibility.

Chairman's Perspective

Alumina Chairman, Peter Day, emphasizes the timing and benefits of the merger, highlighting enhanced financial strength and growth opportunities. Shareholders stand to participate in a leading global aluminum company with a focus on sustainability and low-carbon operations.

Implementation Conditions and Timeline

The Transaction's success depends on various conditions, including shareholder and regulatory approvals. Alumina aims to hold a scheme meeting in the third quarter of 2024, with implementation expected by the same period.

Conclusion

Alumina's collaboration with Alcoa signifies a strategic move towards consolidating resources and leveraging market opportunities. With a clear roadmap outlined in the SID and ongoing expert scrutiny, Alumina anticipates a promising future under the combined entity.

This development underscores a pivotal moment in the aluminum industry, signaling transformative shifts in ownership and operational strategies.

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