Alcoa to Fully Acquire Alumina in $2.2B All-Stock Deal; Questions Raised on Price and Synergies
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Alcoa is acquiring Alumina Limited in an all-stock $2.2B transaction that gives Alumina shareholders a 31.25% stake in the combined company.
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The deal gives Alcoa full ownership of the AWAC joint venture assets that produce bauxite, alumina, and aluminum.
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Management touts potential cost synergies but has not detailed expected savings or opportunities.
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Based on multiples, Alcoa seems to be overpaying for Alumina compared to its own cheaper valuation.
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The market reacted negatively, likely due to the use of Alcoa's cheaper stock to buy more expensive Alumina stock instead of cash/debt.