Mining

Alba to decide on Ma’aden merger early next year

November 13, 2024, 10:15 PM

The merger would make Alba and Ma'aden the largest aluminium smelter in the region

Alba smelts aluminium
Ma’aden mines aluminium
Deal agreed in principle

Aluminium Bahrain (Alba) expects to decide whether to merge with subsidiaries of Saudi Arabia’s Ma’aden by the first quarter of 2025, its chief executive said on Wednesday.

Alba, Bahrain’s largest listed company with a market valuation of almost BHD2 billion ($5.3 billion), on September 16 announced it had entered a non-binding agreement with Ma’aden.

Under the draft terms Ma’aden would give Ma’aden Aluminium Company (MAC) and Ma’aden Bauxite and Alumina Company (MBAC) to Alba, which would issue new shares to Ma’aden.

“Work is in progress. We are expecting the outcome of the decision to go or not to go (for the merger) by quarter one 2025,” Ali Al Baqali, chief executive of Alba, told an analyst call. “Even though the shares will be diluted … as one company it will be bigger.

“With the growth from Alba and the growth from Ma’aden we will be the largest smelter in the region. At the same time, it will add a lot of advantages for both companies.”

Since the mid-September announcement, Alba’s stock is up about 32 percent and Ma’aden shares have gained 35 percent.

On October 24 Alba appointed advisors including McKinsey & Co, PwC Bahrain and Moelis & Co to assist in conducting due diligence on the proposed deal.

“We are working with the consultants to identify and to explore the real synergies which will come. We have high-level synergies, but the real work will come now,” Al Baqali said.

Alba on Tuesday reported a third-quarter profit of BHD54.5 million, up from BHD17.3 million in the prior-year period as revenue rose 8 percent to BHD433.5 million while costs fell slightly.

The London Metal Exchange’s aluminium price, an industry benchmark, averaged $2,383 per tonne in the third quarter, up 11 percent year on year, according to Alba.

Ma’aden, 67 percent owned by Saudi Arabia’s Public Investment Fund, made a third-quarter profit of SAR971.5 million ($258.6 million). That compares with a net loss of SAR83.4 million a year earlier.

Subsidiary Ma’aden Aluminium Co’s nine-month sales were a little over SAR1 billion, while Ma’aden Bauxite and Alumina Co’s were SAR5.0 million. The two units owe SAR5.65 billion combined to the PIF.

Ahead of the Alba agreement, Ma’aden in September announced a complicated deal which will increase its ownership in Ma’aden Aluminium Co and Ma’aden Bauxite and Alumina Co to 100 percent from 74.9 percent currently.