SHANGHAI, Jul 25 - On the evening of July 24, Aluminum Corporation of China Limited (Chalco or the Company, 601600.SH) announced that it planned to acquire 19% of the shares of Yunnan Aluminium (000807.SZ). After the transaction is completed, Chalco would become the largest shareholder of Yunnan Aluminium, holding 29.10% of the shares.
According to the transaction plan, Chalco plans to acquire 19% of the shares held by Yunnan Metallurgical Group in cash through a non-public agreement. The transaction price is proposed to be 10.11 yuan per share, with a total consideration of 6.662 billion yuan. The latest closing price of Yunnan Aluminium stood at 9.58 yuan per share, with a premium of 5.5%.
According to market data, as of the close on July 22, the total market value of Chalco was 69.2 billion yuan, and the market value of Yunlu Aluminium was 33.2 billion yuan, ranking first and third respectively in terms of market value in the aluminium industry chain.
The announcement stated that this transaction is conducive to further solving the problem of horizontal competition with Yunnan Aluminium, and effectively reducing the Company's daily related transactions. After the acquisition, the Company's industry status and profitability will be further enhanced. Counting on the advantages of Yunnan Aluminium in clean energy, the Company will be able to ramp up the production of green aluminium with focus on green, low-carbon and high-quality development.
At the same time, it will give better play to the synergy between the Company and Yunnan Aluminium, realize the integration and intensive management of the aluminium industry, and bring sustainable investment returns. In recent years, Yunnan Aluminium has delivered outstanding performance. Therefore, the acquisition will also endow the Company with better financial performance as well as enhanced core competitiveness and value, which is in line with the overall interests of the Company and its shareholders.
On the same day, Yunnan Aluminium issued a notice on the change of controlling stakes. After the completion of the share transfer, the controlling shareholder will be changed to Chalco, and the indirect controlling shareholder is still Chinalco (Aluminum Corporation of China); while the actual controller is still the State-owned Assets Supervision and Administration Commission of the State Council.
According to the data disclosed at the end of the first quarter, the largest shareholder of Yunnan Aluminium is Yunnan Metallurgy, with a shareholding of 32%. Chalco is the second largest shareholder with a shareholding of 10.10%.
Horizontal competition solution is already under planning years ago
Previously, due to the horizontal competition between Yunnan Aluminium and Chalco in sectors including alumina and aluminium, Chinalco, as the indirect controlling shareholder of Yunnan Aluminium and the direct controlling shareholder of Chalco, promised to consider effective solutions starting in 2019, and solve the problem of horizontal competition within five years.
In December 2019, Chalco subscribed more than 31 million non-publicly issued shares of Yunnan Aluminium Co., Ltd. at a price of 4.1 yuan per share, with a total transaction price of about 1.29 billion yuan, accounting for 10.04% of the total share capital of Yunnan Aluminium after the private placement. In 2021, Chalco once again participated in the subscription of the shares of Yunnan Aluminium, and the shareholding reached 10.10% by then.
According to the 2021 annual report of Chalco, the company's alumina and aluminium output was 16.23 million mt and 3.86 million mt respectively. The Company's alumina and high-purity aluminium capacity both ranks first in the world, and its primary aluminium capacity ranks second world-widely.
According to the 2021 annual report of Yunnan Aluminium, it has an aluminium capacity of 3.05 million mt, and is the largest green and low-carbon aluminium supplier in China.
Data show that by the end of 2021, China's total aluminium capacity stood at 43.25 million mt. In other words, the combined capacity of Chalco and Yunnan Aluminium accounts for 17.5% of China's total.
