Rio Tinto, Chalco to acquire controlling stake in CBA from Votorantim

Core Viewpoint - Rio Tinto and Chalco have entered into a definitive agreement to acquire a controlling stake in Companhia Brasileira de Alumínio (CBA) from Votorantim, aiming to enhance their presence in the low-carbon aluminium sector [1][3]. Group 1: Acquisition Details - The acquisition is structured as a joint venture, with Rio Tinto holding 33% and Chalco 67%, valuing Votorantim's 68.596% stake in CBA at approximately $902.6 million [1]. - A cash payment of 10.50 reais ($0.66) per share will be made, representing a 21.2% premium over the prior 20-day average trading price of CBA shares [2]. - Following the acquisition, the joint venture plans to initiate a mandatory tender offer for the remaining shares in CBA, as required by Brazilian legislation [2]. Group 2: Strategic Implications - The acquisition aims to leverage combined expertise in aluminium production to drive growth at CBA, particularly in the global low-carbon aluminium sector [3]. - CBA operates a comprehensive low-carbon aluminium operation in Brazil, supported by a 1.6GW renewable energy portfolio, including 21 hydropower plants and wind power installations [3]. - The acquisition aligns with Rio Tinto's strategy to extend its low-carbon, renewable-powered aluminium footprint in rapidly growing markets, while also providing opportunities to grow its bauxite and alumina supply chain in the Atlantic region [5]. Group 3: Operational Insights - CBA primarily serves the domestic market, with production activities that include three bauxite mines yielding around two million tonnes annually, along with an alumina refinery and an aluminium smelter [4]. - The partnership between Rio Tinto and Chalco is expected to combine operational excellence and innovation, creating value for shareholders, employees, customers, and local communities [6]. Group 4: Regulatory and Compliance Aspects - The transaction is subject to regulatory approvals and customary conditions [3]. - Plans for a delisting tender offer may coincide with the mandatory tender offer but could be reassessed after the acquisition is finalized [7]. - Rio Tinto and its affiliates may also engage in purchasing CBA shares outside the US during the pending tender offer period, in compliance with applicable regulations [7].