Alcoa Corporation ( AA ) shares are trading higher after it entered a binding agreement with Saudi Arabian Mining Company (Ma’aden) to sell its 25.1% ownership in the Ma’aden Joint Venture for around $1.1 billion.

The transaction comprises around 86 million Ma’aden shares, valued at $950 million based on the 30-day volume-weighted average price as of September 12, 2024, and $150 million in cash.

The 2009 Saudi joint venture includes Ma’aden Bauxite and Alumina Company (MBAC) and Ma’aden Aluminium Company (MAC). Alcoa ( AA ) holds 25.1% of the joint venture, valued at $545 million as of June 30, 2024.

As per the deal, Alcoa ( AA ) will retain its Ma’aden shares for at least three years, with one-third becoming transferable after the third, fourth, and fifth anniversaries of the transaction’s closing.

During this holding period, Alcoa ( AA ) can hedge or borrow against its shares. In certain conditions, the holding period may be shortened.

After the transaction, Alcoa ( AA ) will hold approximately 2% of Ma’aden’s outstanding shares.

The transaction is pending regulatory approvals, Ma’aden shareholder approval, and other customary conditions, with an expected closing in the first half of 2025.

William F. Oplinger, Alcoa’s President and CEO, said, “The transaction simplifies our portfolio, enhances visibility in the value of our investment in Saudi Arabia and provides greater financial flexibility for Alcoa ( AA ), an important part of improving our long-term competitiveness.”

“Since 2009, Alcoa ( AA ) has been a valued partner of Ma’aden, and our aluminium business has benefited substantially from our strategic partnership,” stated Bob Wilt, Ma’aden’s CEO.

Alcoa ( AA ) closed the second quarter with a cash balance of $1.49 billion.

Investors can gain exposure to the stock via Macquarie ETF Trust Macquarie Energy Transition ETF and SPDR S&P Metals & Mining ETF ( XME ) .

Price Action: AA shares are up 1.45% at $32.99 premarket at the last check Monday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.