Alcoa ( AA ) inked a binding Scheme Implementation Deed to acquire Alumina Limited ( AWCMF ) (OTC:AWCMF) in an all-scrip, or all-stock, transaction. 

Last month, Alcoa ( AA ) made a $2.2 billion offer to acquire Alumina, its Alcoa World Alumina & Chemicals (AWAC) joint-venture partner. 

Based on Alcoa’s closing share price as of February 23, 2024, the last trading day before the announcement of the Process Deed, the Agreed Ratio implies a value of A$1.15 per Alumina Limited ( AWCMF ) share.

The terms are the same as earlier communicated, with Alcoa ( AA ) offering 0.02854 of its stock for each Alumina share. 

As part of the deal, interests in Alcoa ( AA ) shares would be delivered in the form of CHESS Depositary Interests (CDI) that represent a unit of beneficial ownership in Alcoa ( AA ) shares, which would allow Alumina shareholders to trade Alcoa ( AA ) common stock via CDIs on the Australian Stock Exchange. 

The transaction is expected to be completed in the third quarter of 2024, subject to the satisfaction of customary conditions and companies’ shareholders and receipt of required regulatory approvals. 

Post-deal closure, Alcoa ( AA ) shareholders would own 68.75% of the combined company, and Alumina’s shareholders would own 31.25%.

Additionally, Allan Gray Australia, currently the largest substantial holder in Alumina Limited ( AWCMF ), has confirmed it continues to support the proposed transaction.

Under the terms of the Agreement and at Alumina’s request, Alcoa ( AA ) has agreed to provide short-term liquidity support to Alumina to fund equity calls made by the AWAC joint venture if Alumina’s net debt position exceeds $420 million. 

William F. Oplinger, Alcoa’s President and CEO, said, “Entering into the Scheme Implementation Deed to acquire Alumina Limited ( AWCMF ) is a milestone on our path to deliver value for both Alcoa ( AA ) and Alumina shareholders.”

“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 ( AWCMF ) shareholders the opportunity to participate in a stronger, better-capitalized combined company with upside potential.”

In January 2024, Alcoa ( AA ) reported fourth-quarter FY23 EPS of a loss of 56 cents versus a loss of 78 cents and revenue of $2.60 billion versus $2.63 billion.

As of December 31, Alcoa ( AA ) had cash and cash equivalents of $944 million.

Price Action: AA shares are down 0.13% premarket at $30.45 on the last check Tuesday.