Alcoa sells stake in China's Chalco for US$2 billion
Updated: 2007-09-13 12:42
Alcoa Inc, the biggest US aluminum producer, has sold its nearly 7 percent stake in China's largest aluminum maker for US$2 billion.
Pittsburgh-based Alcoa said Wednesday it will continue to invest in the aluminum industry in China, where it first opened offices in 1993 and currently manufactures foil, fasteners, automotive components and other products.
Alcoa had been an investor in Aluminum Corporation of China Ltd, also known as Chalco, since the Chinese company's initial public offering in 2001. Its initial investment was less than US$200 million.
The company sold its interest for the equivalent of US$2.23 a share, a 15 percent discount to Wednesday's closing price on the Hong Kong Stock Exchange.
The shares were marketed in Hong Kong and Europe and purchased by 20 to 25 major institutional buyers, according to Alcoa spokesman Jake Siewert. The sale was handled by Goldman Sachs.
"We normally do not act as financial investors, but we participated in the Chalco IPO six years ago to help facilitate its entry into the capital markets," Alcoa's chairman and chief executive, Alain Belda, said in a statement.
"Over the past seven years Chalco has become firmly established in the equity market so our role as a financial investor is no longer needed, and we can redeploy our capital into other value-adding options, including projects in China," he said.
Alcoa has an ongoing share buyback program and has outlined plans to maintain its debt-to-capital ratio and invest in other projects in China and elsewhere. The sale will appear as a gain in Alcoa's third quarter earnings, to be reported in October.
Alcoa's commitment to China has "never been stronger," Belda said, adding that the company looks forward "to continuing to work with our partners and Chalco to help the industry realize its great potential."
The company said it was spending US$300 million to expand its Bohai rolling mill in Qinghuangdao, a coastal city east of Beijing.
Alcoa has formed several joint ventures in China in recent years as part of an effort to expand its presence there.
China is the world's biggest producer and consumer of aluminum, with output at 9.3 million tons of primary aluminum in 2006, up from 3.4 million tons in 2001.
Alcoa has 116,000 employees in 44 countries. It was the world's largest aluminum producer until earlier this year, when it was surpassed by Moscow-based United Company Rusal, which was formed in a three-way merger.
Alcoa shares fell 55 cents, or 1.6 percent, to close at US$33.65 in trading Wednesday.
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