Alcoa enters into Scheme Implementation Deed
with Alumina Limited on terms consistent with previously agreed and
announced Process Deed
Both Alcoa and Alumina Limited Boards of
Directors recommend that its shareholders vote in favor of the
transaction
Expected to result in long-term value creation
for both companies’ shareholders
Alcoa (NYSE: AA or “Alcoa”) today announced that it has entered
into a binding Scheme Implementation Deed (the “Agreement”) with
Alumina Limited (ASX: AWC), under which Alcoa will acquire Alumina
Limited in an all-scrip, or all-stock, transaction. The Agreement
terms are consistent with the previously agreed and announced
transaction process deed (“Process Deed”).
Consistent with the Process Deed, the Alumina Limited Board of
Directors has recommended that Alumina Limited shareholders vote in
favor of the Agreement 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. The Independent Directors of Alumina Limited,
and its Managing Director and Chief Executive Officer intend to
vote all shares of Alumina Limited held or controlled by them in
favor of the Agreement.
“Entering into the Scheme Implementation Deed to acquire Alumina
Limited is a milestone on our path to deliver value for both Alcoa
and Alumina shareholders,” said William F. Oplinger, Alcoa’s
President and CEO. “This transaction provides enhanced
opportunities for value creation, including strengthening Alcoa’s
position as one of the world’s largest bauxite and alumina
producers and providing Alumina Limited shareholders the
opportunity to participate in a stronger, better-capitalized
combined company with upside potential. We look forward to building
on Alcoa’s success and continuing to execute our long-term
strategy.”
Agreement Details
The terms of the Agreement are consistent with the Process Deed.
Accordingly, under the Agreement, Alumina Limited shareholders
would receive consideration of 0.02854 Alcoa shares for each
Alumina Limited share (the “Agreed Ratio”). Upon completion of the
transaction, Alumina Limited shareholders would own 31.25 percent,
and Alcoa shareholders would own 68.75 percent of the combined
company.1 Based on Alcoa’s closing share price as of February 23,
2024, the last trading day prior to the announcement of the Process
Deed, the Agreed Ratio implies a value of A$1.15 per Alumina
Limited share and an equity value of approximately $2.2 billion for
Alumina Limited. 2
As part of the Agreement, interests in Alcoa shares would be
delivered in the form of CHESS Depositary Interests (“CDIs”) that
represent a unit of beneficial ownership in a share of Alcoa common
stock 3, which would allow Alumina Limited shareholders to trade
Alcoa common stock via CDIs on the Australian Stock Exchange
(“ASX”). In order to allow the trading of Alcoa CDIs, Alcoa will
apply to establish a secondary listing on the Australian Securities
Exchange. Alcoa has committed to maintain the CDI listing for at
least 10 years.
In addition, two new mutually agreed upon Australian directors
from Alumina Limited’s Board would be appointed to Alcoa’s Board of
Directors upon closing of the transaction.
Under the terms of the Agreement and at Alumina's request, Alcoa
has agreed to provide short-term liquidity support to Alumina
Limited to fund equity calls made by the AWAC joint venture if
Alumina Limited’s net debt position exceeds $420 million. Based on
AWAC's current 2024 cashflow forecast, Alcoa does not expect any
support to be required in the 2024 calendar year. Subject to
certain accelerated repayment triggers, Alumina Limited would be
required to pay its equity calls (plus accrued interest) not later
than September 1, 2025 in the event the transaction is not
completed.
Allan Gray Australia, currently the largest substantial holder
in Alumina Limited, has confirmed it continues to be supportive of
the proposed transaction.
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 from
the antitrust regulators in Australia and Brazil. The transaction
is not conditional on due diligence or financing.
Transaction Website
Associated materials regarding the transaction will be 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 U.S. federal, state, or local laws, regulations, or
policies; (25) climate change, climate change legislation or
regulations, and efforts to reduce emissions and build operational
resilience to extreme weather conditions; (26) our ability to
achieve our strategies or expectations relating to environmental,
social, and governance considerations; (27) claims, costs and
liabilities related to health, safety, and environmental laws,
regulations, and other requirements, in the jurisdictions in which
we operate; (28) liabilities resulting from impoundment structures,
which could impact the environment or cause exposure to hazardous
substances or other damage; (29) our ability to fund capital
expenditures; (30) deterioration in our credit profile or increases
in interest rates; (31) restrictions on our current and future
operations due to our indebtedness; (32) our ability to continue to
return capital to our stockholders through the payment of cash
dividends and/or the repurchase of our common stock; (33) cyber
attacks, security breaches, system failures, software or
application vulnerabilities, or other cyber incidents; (34) labor
market conditions, union disputes and other employee relations
issues; (35) a decline in the liability discount rate or
lower-than-expected investment returns on pension assets; and (36)
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 Based on the prevailing
AUD / USD exchange rate of 0.656 as of February 23, 2024. 3 Each
Clearing House Electronic Sub-register System Depositary Interest
represents a unit of beneficial ownership in a share of Alcoa
common stock.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240311270242/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
Alcoa (NYSE:AA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Alcoa (NYSE:AA)
Historical Stock Chart
From Apr 2023 to Apr 2024