Aluminium Bahrain (Alba) has entered into a non-binding agreement with the Saudi Arabian Mining Company (Maaden) to initiate due diligence for a potential business merger involving certain segments of Maaden’s aluminium strategic business unit. This agreement, according to a statement, was approved by Alba’s Board of Directors in their recent meeting.
Potential industry impact
If realized, this merger could significantly alter the landscape of the global aluminium industry, establishing the combined entity as one of the largest aluminium producers in the world, as per the statement. This collaboration aims to create a larger, vertically integrated industry leader, yielding substantial synergies that offer benefits such as increased production capacity, a broader global footprint, enhanced ESG performance, improved energy security, and considerable value creation for shareholders.
Due diligence process
Throughout the due diligence phase, both companies will share information and assess the strategic and financial advantages of the proposed merger. However, the announcement clarifies that there is no guarantee these discussions will culminate in a binding agreement or completed transaction.
In the context of their discussions, Alba and Ma’aden explored various aspects of the potential transaction structure for their proposed merger, including the possibility of Alba being cross-listed on the Saudi Exchange.
Proposed contributions and share exchange
Pending regulatory approvals—including those from the Central Bank of Bahrain—along with necessary corporate endorsements, confirmatory due diligence, and valuation assessments, the proposed structure anticipates that Ma’aden will make an in-kind contribution. This would involve Ma’aden transferring the entire share capital of two subsidiaries, Ma’aden Aluminium Company (MAC) and Ma’aden Bauxite and Alumina Company (MBAC), as well as rights related to the marketing and sale of products produced by MAC, to Alba. In return, Alba would issue new shares to Ma’aden.
Alba and Ma’aden have also agreed to discuss the potential cross-listing of Alba on the Saudi Exchange as they move forward in the merger process.
Conditions for the transaction
Alba emphasized that the transaction is contingent upon confirmatory due diligence, receipt of all necessary corporate and regulatory approvals, as well as the execution of definitive agreements. The company will communicate additional updates to the market and regulators as needed.
With a production capacity exceeding 1.62 million metric tonnes per annum (mtpa) in 2023, Alba stands as a leading aluminium smelter, boasting a 50-year legacy of excellence in operations, safety, environmental stewardship, and community development.
Benefits of the merger
Alba’s Chairman of the Board, Khalid Al Rumaihi, expressed that the potential partnership would expedite Alba’s growth strategy, establishing a global leader and reinforcing its status as the largest aluminium producer in the region. He noted that this merger would enable both companies to increase production, enhance their global footprint, and explore new avenues in clean energy. Additionally, he highlighted that the collaboration would strengthen the ties between Bahrain and Saudi Arabia while contributing to Bahrain’s economic diversification and job creation. He described the situation as a compelling opportunity and an exciting time for Alba, Ma’aden, and their stakeholders, indicating that further updates would be shared in due course.
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Enhancing economic ties
Ma’aden Chief Executive Officer, Bob Wilt, emphasized that leveraging the combined scale and expertise of both companies would create a new global leader in the aluminium sector, advancing Ma’aden’s ambitions while significantly strengthening the economic ties between Bahrain and Saudi Arabia. He pointed out that uniting two of the region’s most experienced players would pave the way for enhanced economic growth, increased job creation, and greater aluminium production capacity. Wilt noted that this partnership would enhance their competitive position on a global scale. He also affirmed their ongoing commitment to customers, ensuring that together, Ma’aden and Alba would provide a more extensive and reliable aluminium supply. He expressed enthusiasm about collaborating with Alba to explore how they could jointly maximize this opportunity to deliver value for their employees, investors, and economies.
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