Saudi Arabia’s Ma’aden recently entered into a binding share purchase and subscription agreement with Alcoa, the world’s eighth-largest producer of aluminum, to acquire a 25.1 percent stake in the Ma’aden joint venture for approximately $1.1 billion.
The transaction consideration comprises approximately 86 million shares of Ma’aden worth $950 million and $150 million in cash.
“Since 2009, Alcoa has been a valued partner of Ma’aden, and our aluminum business has benefited substantially from our strategic partnership. We look forward to future opportunities to collaborate as we continue to build the mining sector into the third pillar of the Saudi economy,” stated Bob Wilt, CEO of Ma’aden.
The Ma’aden joint venture launched in 2009 as a fully integrated mining complex in Saudi Arabia. Today, it comprises two entities: the Ma’aden Bauxite and Alumina Company and the Ma’aden Aluminium Company. Alcoa currently owns 25.1 percent of the joint venture while Ma’aden owns 74.9 percent. As of June 30, 2024, the carrying value of Alcoa’s investment was $545 million.
“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,” stated William F. Oplinger, president and CEO of Alcoa.
Read: Supporting the next generation of private markets professionals in Saudi Arabia
Transaction to close in H1 2025
The transaction with Alcoa is subject to regulatory approvals, approval by Ma’aden’s shareholders, and other customary closing conditions. The company also noted that it will likely close in the first half of 2025.
Under the agreement, Alcoa will hold its Ma’aden shares for a minimum of three years. One-third of the shares become transferable after each of the third, fourth and fifth anniversaries of the closing of the transaction. During the holding period, Alcoa can hedge and borrow against its Ma’aden shares. Under certain circumstances, such minimum holding period would be reduced. Pro forma for the transaction, Alcoa would own approximately 2 percent of Ma’aden’s current shares outstanding.
For more news on markets, click here.
