Alcoa Settles Dispute With Australian Joint-Venture Partnerby and
Aluminum producer agreed to amend plan to split up company
Accord clears way for Alcoa reorganization later this year
Alcoa Inc. said it agreed to settle a dispute with its joint-venture partner in Australia over a plan to split the aluminum producer into two companies as part of a corporate reshuffling.
New York-based Alcoa and Melbourne-based Alumina Ltd. agreed to make some changes in its Australian operations to clear the way for separating Alcoa’s manufacturing business from its legacy smelting and refining segments, Alcoa said in a statement Thursday.
Under the deal, the companies agreed to drop the litigation.
Alcoa Chief Executive Officer Klaus Kleinfeld plans by year’s end to group its smelters, mines and power assets into a stand-alone entity that will keep Alcoa’s name. Alumina vowed to block the split, saying it would harm the joint venture’s business and violate the terms of its deal.
The Alcoa split is part of Kleinfeld’s strategy for reviving the 128-year-old aluminum producer’s fortunes. Through about $5 billion in acquisitions, Kleinfeld is positioning Alcoa to become a leading provider of metal products such as aluminum parts for carmakers and gas-turbine producers. The manufacturing company will be called Arconic.
Alcoa sued Alumina in state court in Delaware in May seeking to bar its partner from interfering with the company’s break up. Alumina is Alcoa’s minority partner in Alcoa World Alumina and Chemicals, the world’s largest alumina producer, known as AWAC. It argued that it had to agree to the split.
The two companies set up their AWAC joint-venture involving bauxite and alumina mining, along with manufacturing operations, in 1994. Alcoa holds a 60 percent interest while Alumina has 40 percent, according to court filings.
Alcoa asked a judge to find that the joint-venture agreement didn’t give Alumina any say over the split and that the separation doesn’t harm the combined company’s operations. A trial had been set for next month in Wilmington, Delaware.
“We are strengthening our partnership agreement and more closely aligning the partners’ interests,” said Roy Harvey, President of Alcoa’s Global Primary Products unit.
The case is Alcoa Inc. v. Alumina Limited, No. 12385, Delaware Chancery Court (Wilmington)