Chinalco and Rio Tinto Buy Controlling Stake in Brazil’s CBA for 4.69 Billion Reais

Joint venture picks up 68.6% of Companhia Brasileira de Aluminio, triggering a mandatory tender offer that could prompt delisting from B3

By Caleb Monroe RIO

Chinalco and Rio Tinto Buy Controlling Stake in Brazil’s CBA for 4.69 Billion Reais

RIO

Chinalco and Rio Tinto agreed to acquire a 68.6% interest in Companhia Brasileira de Aluminio (CBA) from Grupo Votorantim for 4.69 billion reais ($903.61 million). The transaction, announced Thursday, involves 446.6 million shares at 10.50 reais each and will be managed through a joint venture with Chinalco’s subsidiary holding 67% and Rio Tinto 33%. A mandatory tender offer for remaining shares is required under Brazilian rules and may lead to delisting from the Sao Paulo exchange B3.

Key Points

Chinalco and Rio Tinto will acquire a 68.6% stake in CBA for 4.69 billion reais ($903.61 million), buying 446.6 million shares at 10.50 reais each from Grupo Votorantim.
The acquired stake will be managed via a joint venture where Chinalco’s subsidiary holds 67% and Rio Tinto holds 33%.
A mandatory tender offer for remaining shares is required under Brazilian rules and could lead to CBA being delisted from the Sao Paulo exchange B3; the deal affects the aluminum and broader mining sectors and equity markets.

Chinalco and Rio Tinto have reached an agreement to purchase a controlling stake in Brazilian aluminum producer Companhia Brasileira de Aluminio (CBA) for 4.69 billion reais, equivalent to $903.61 million, the companies said Thursday.

The acquisition covers 68.6% of CBA, amounting to 446.6 million shares. The sellers are Brazilian conglomerate Grupo Votorantim, and the price agreed is 10.50 reais per share.

Under the terms of the transaction and in accordance with Brazilian securities regulation, the buyers will launch a mandatory tender offer to acquire any remaining shares in CBA. That process could result in the company being removed from trading on the Sao Paulo exchange B3 if sufficient shareholders accept the offer.

The combined stake will be administered through a joint venture. In that structure, a subsidiary of Chinalco will own 67% of the joint venture and Rio Tinto will hold the remaining 33%.

CBA operates an integrated aluminum production system described as low carbon. Its business encompasses the full chain from bauxite mining to refining and smelting, and includes the manufacture of various primary aluminum products.

Context and implications

The deal transfers control of a vertically integrated aluminum producer to a partnership between a major Chinese miner and a global mining company. The mandatory tender offer required by Brazilian law introduces a path for the buyers to acquire the outstanding public float, and it raises the possibility that CBA could cease trading on the Sao Paulo exchange should the offer result in consolidation of ownership.

The announcement provides specific financial terms and the ownership split within the joint venture, but it does not set out a timetable for closing, regulatory clearances, or details of operational integration following the acquisition.

Summary of transaction terms

Purchase price: 4.69 billion reais ($903.61 million)
Stake acquired: 68.6% (446.6 million shares)
Price per share: 10.50 reais
Seller: Grupo Votorantim
Joint venture ownership: Chinalco subsidiary 67%, Rio Tinto 33%

Risks

The mandatory tender offer for remaining CBA shares could result in the company being delisted from the Sao Paulo exchange B3, affecting liquidity and minority shareholders.
The announcement does not provide a timeline for closing or for required regulatory approvals, leaving uncertainty over when the transaction will be completed.
Details on post-transaction operational or integration plans were not disclosed, limiting clarity on how the joint venture will manage CBA’s integrated aluminum operations.

Menu

Chinalco and Rio Tinto Buy Controlling Stake in Brazil’s CBA for 4.69 Billion Reais

Key Points

Risks

More from Stock Markets