Alumina backs Alcoa takeover

Alumina has entered into a binding scheme implementation deed with joint venture partner Alcoa, which intends to acquire the company in a deal worth $3.4 billion. 

This development follows on from the company informing the market on February 26 that both parties had signed an exclusivity deed, after the American aluminium giant provided a non-binding, indicative, conditional proposal for Alumina.

As part of the SID, Alumina shareholders are entitled to receive 0.02854 Alcoa shares for each share held - with the company's Board in favour of Alcoa's intentions.

Based in Pittsburgh, Pennsylvania, US-listed Alcoa last traded at $US30.49 per share, or $A46.09 - while ASX-listed Alumina closed trade on Tuesday at $1.27 per share, up 8 per cent. 

“We believe the time is right to combine our two companies," Alumina chairman Peter Day said.

"The combined entity will have a larger and stronger balance sheet, and be better able to fund the current portfolio restructuring actions in AWAC, as well as realising potential growth options in the medium to longer term.

"Alumina shareholders will participate in a leading global pure play upstream aluminium company, with a low carbon smelting portfolio.”

These sentiments were echoed by Alcoa's president and chief executive officer William F Oplinger.

"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 shareholders the opportunity to participate in a stronger, better-capitalized combined company with upside potential," he said.

"We look forward to building on Alcoa’s success and continuing to execute our long-term strategy.”

Since 1994, Alcoa and Alumina's 60-40 joint venture Alcoa World Alumina and Chemicals has reaped the benefits of a sizeable footprint south of Perth, operating facilities at Pinjarra, Wagerup and Kwinana. 

In January, Alcoa revealed it would cease operations at its Kwinana refinery in 2024, due to a multitude of factors.