Hydro Announces Plan to Acquire Vale SA’s Aluminum Business

Hydro AS has agreed to acquire Vale’s aluminum business for $4.9 billion. The deal will include full or partial ownership of Vale’s mining, alumina refining and alumina production facilities. Hydro will receive $1.1 billion in cash and new shares in Hydro equal to a 22 percent stake in the Norwegian company, making Vale the second largest shareholder in the company following the Norwegian government.

The transaction is expected to be complete by the end this year.

In its initial response, the Norwegian government said the following: “We have stated in our ownership policy documents that the state has commercial objectives with its ownership in Hydro, but also an objective to ensure that head office functions remain in Norway. The government believes that the state should have a large ownership interest in Hydro. The transaction will dilute the state’s holding down towards 34 percent. The state’s ambition in the longer term will be to bring its holding up towards 40 percent.”

The deal will give Norsk Hydro majority ownership of a number of Vale’s Brazilian assets, including the Paragominas mine, one of the largest bauxite mines in the world, as well as 91 percent ownership in the Alunorte alumina refinery. The company also will obtain a 51 percent stake in the Albras aluminum plant and 81 percent of the CAP alumina refinery.

Photo courtesy of Norsk Hydro.