Norwegian aluminum producer Norsk Hydro ASA has signed a US$4.9 billion deal to buy the majority of Brazilian mining company Vale SA’s aluminum operations, officials said on Sunday.
Oslo-based Norsk Hydro said it would pay US$1.1 billion in cash for the operations and give Vale shares in Norsk Hydro representing 22 percent of the company.
Considering the shares’ value on Friday, the total value of the deal is US$4.9 billion, it said.
Vale is the world’s largest producer of iron ore and has more than 100,000 employees around the world.
The deal will give Norsk Hydro control of 60 percent of the world’s No. 3 bauxite mine, Paragominas in Brazil. It also has the right to take over the remaining 40 percent stake in two installments, in 2013 and 2015, for US$200 million each.
Norsk Hydro will also take control of 91 percent of alumina refinery Alunorte, 51 percent of the Albras aluminum plant and 81 percent of the CAP alumina refinery project.
As part of the deal, about 3,600 Vale employees will be transferred to Norsk Hydro, which already employs about 19,000 people in 40 countries.
Norsk Hydro’s president and chief executive Svein Richard Brandtzaeg said the deal was the “biggest transaction in Hydro’s history.”
“The acquisition in Brazil will secure raw materials for more than 100 years of aluminum production,” Brandtzaeg said in a statement. “This gives the entire company greater strength, makes us more robust. At the same time, we will be transformed from a company with its center in Europe to a leading global aluminum concern, with production and market positions in the Americas, Australia, Europe and the Middle East.”
The company said it would finance the acquisition by launching a fully underwritten rights issue of 10 billion Norwegian kroner (US$1.7 billion). The rights issue and the deal are supported by the Norwegian state, which currently owns 43.8 percent of Norsk Hydro shares.
After the deal, the Norwegian state’s share in Norsk Hydro will drop to 34.5 percent. Vale will get a seat on Norsk Hydro’s board of directors.
The transaction and the rights issue are subject to approval by the Norwegian parliament and a Norsk Hydro extraordinary general meeting, which will be held at the end of next month.
Norsk Hydro said it expects the transaction to be closed in the fourth quarter of this year.
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