Alcoa (NYSE:AA) shares jumped 8% on Monday after announcing plans to sell its 25.1% stake in the Ma'aden Joint Venture to Saudi Arabian Mining Company (Ma'aden) for approximately $1.1 billion.
The deal includes around 86 million Ma'aden shares, valued at $950 million, and $150 million in cash, according to Alcoa's press release.
The joint venture, established in 2009, is a fully integrated mining complex in Saudi Arabia and comprises the Ma'aden Bauxite and Alumina Company (MBAC) and the Ma'aden Aluminium Company (MAC).
Alcoa currently holds a 25.1% stake in the joint venture, while Ma'aden owns the remaining 74.9%. As of June 30, 2024, Alcoa's investment in the venture had a carrying value of $545 million.
Alcoa's President and CEO, William Oplinger, stated: "We are confident that under the new arrangement, MBAC and MAC are well-positioned for success."
He also highlighted how the sale would simplify Alcoa's portfolio and enhance the visibility of its investment in Saudi Arabia while providing the company with greater financial flexibility to improve long-term competitiveness.
As part of the agreement, Alcoa will hold its Ma'aden shares for at least three years, with one-third of the shares becoming transferable after the third, fourth, and fifth anniversaries of the deal's closing.
The deal is expected to close in the first half of 2025, pending regulatory and shareholder approvals.
Bob Wilt, Ma'aden's CEO, remarked on Alcoa's long-standing partnership, saying, "Since 2009, Alcoa has been a valued partner of Ma'aden, and our aluminium business has benefited substantially from our strategic partnership."
Citi is acting as Alcoa's exclusive financial advisor for the transaction.