Alba, one of the world’s largest smelters, and Saudi Arabian Mining Company (Maaden) are exploring a potential business combination that would reshape the global aluminium industry.

The two companies said yesterday they have signed a non-binding agreement to commence due diligence towards the combination.

The potential partnership would create a larger, vertically integrated global champion with significant synergies, offering advantages such as expanded production capacity, enhanced global presence, improved ESG performance, greater energy security, and significant shareholder value creation.

“The potential partnership accelerates Alba’s growth strategy, creating a global champion and cementing our position as the largest regional aluminium producer,” said Alba chairman Khalid Al Rumaihi. “This combination will allow both companies to scale-up production, extend our global presence and explore new opportunities in clean energy. Our partnership will not only deepen the strong ties between Bahrain and Saudi Arabia, but also contribute to Bahrain’s economic diversification and job creation.”

Mr Al Rumaihi added: “This is a compelling proposition and an exciting moment for Alba, Maaden, and our respective stakeholders, and we look forward to sharing further updates in due course.”

Bob Wilt, chief executive of Maaden, said the partnership would “elevate our competitive edge on a global scale”.

“By bringing together two of the region’s most experienced players in the sector, we are setting the stage for stronger economic growth, enhanced job creation, and increased aluminium production capacity. Our continued commitment to our customers underpins this venture, ensuring that together, Maaden and Alba will provide access to a more expansive and reliable supply of aluminium,” he said.

During the due diligence period, both companies will exchange information and evaluate the strategic and financial benefits of a business combination. There is no assurance that these discussions will lead to a definitive agreement or a completed transaction.

As part of the discussions on the non-binding agreement, Alba and Maaden discussed, among other things, the potential transaction structure for implementing their proposed business combination and the potential cross-listing of Alba on the Saudi Exchange.

Subject to regulatory approvals, corporate approvals, confirmatory due diligence, and valuation assessments, the proposed structure would involve Maaden making an in-kind contribution.

This would include Maaden contributing the entire share capital of two of its subsidiaries, Maaden Aluminium Company (MAC) and Maaden Bauxite and Alumina Company (MBAC), along with contractual rights concerning the marketing and sale of products produced by MAC, to Alba. In exchange, Alba would issue new shares to be allotted to Maaden.

Alba and Maaden have also agreed to discuss the cross-listing of Alba on the Saudi Exchange during the next phase of the proposed business combination.

Alba emphasised that the transaction is subject to, without limitation, confirmatory due diligence, receipt of all corporate (board and shareholder) and regulatory approvals and signing of definitive agreements. Alba will provide further information to the market and regulators as appropriate.

With a production capacity of more than 1.62 million metric tonnes per annum (mtpa), Alba is a world-leading aluminium smelter with a 50-year legacy.

As of 2023, the Bahraini giant employed approximately 3,150 people.

avinash@gdnmedia.bh