Norway’s Norsk Hydro buys Vale’s aluminium assets for $4.9 billion

Norwegian aluminium and renewable energy company Norsk Hydro ASA (Hydro) is acquiring the world's second-largest miner Vale SA's aluminium businesses for approximately $4.9 billion securing the company's supply of bauxite, the primary raw material for making aluminium, for over 100 years.

Under the terms, Hydro will pay Vale $1.1 billion in cash and 22-per cent ownership in Hydro through the issue of shares. The total value of the transaction as of April end is approximately $4.9 billion, including net debt of 700 million.

Oslo-based Norsk Hydro is the world's third-largest integrated aluminium supplier with operations spread across the globe. The company is also a major producer of renewable energy. Hydro reported revenue of $11.4 billion in 2009. The Norwegian state holds 43.8 per cent stake in the company.

All the assets identified for acquisition are located in Brazil. Through the transaction, Hydro will get a 60-per cent stake in Paragominas, the world's third-largest bauxite mines, with the possibility to acquire the balance 40 per cent in 2013 and 2015.

Further, Hydro will increase its interest in Alunorte, the world's largest alumina refinery from the current 34 per cent to 91 per cent and raise its stake in CAP alumina refinery project from 20 per cent to 81 per cent.

Hydro will also get 51 per cent ownership in Albras aluminium plant which has a production capacity of 460,000 tonnes per annum.