06:47 AM EDT, 09/16/2024 (MT Newswires) -- Alcoa ( AA ) agreed to offload its entire stake in a joint venture with Saudi Arabian Mining, known as Ma'aden, to the state-owned mining company in a stock and cash deal worth $1.1 billion.

The aluminum manufacturer will sell its 25.1% ownership in the venture for about 86 million Ma'aden shares, valued at $950 million as of last Thursday, and $150 million in cash, it said Sunday. The shares represent 2.21% of Ma'aden's share capital after the transaction closes, the Saudi firm said in a separate statement.

The JV, which was established in Saudi Arabia in 2009, includes a bauxite mine and alumina refinery and an aluminum smelter and casthouse facility. As majority shareholder, Ma'aden owned 74.9% of the venture.

"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," Alcoa ( AA ) Chief Executive William Oplinger said. Shares of the company were up 1.5% in premarket activity Monday.

Alcoa ( AA ) expects the deal, which requires approval from regulators, as well as from Ma'aden's investors, to complete in the first half of next year. Ma'aden forecasts the transaction to close by the first quarter of 2025.

Alcoa ( AA ) will hold its Ma'aden shares for at least three years, with one-third of the stock becoming transferable after each of the third, fourth and fifth years of the transaction's completion. The aluminum manufacturer said the carrying value of its investment in the venture was $545 million at the end of June.

Earlier in the year, Alcoa ( AA ) struck a $2.2 billion all-stock deal to purchase its Australian joint venture partner Alumina, as it sought to consolidate ownership of its core bauxite and alumina tier 1 assets. The transaction is expected to complete in the ongoing quarter, the company said in March.

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