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Chalco to Takeover Baotou Aluminum Through Share Swap

Aluminum Corp. of China said on Tuesday it would take over sister firm Baotou Aluminum in the latest series of internal restructuring by Chinese-listed firms.

Chalco , the world's third-largest producer of alumina, said it would issue new shares to acquire Baotou Aluminum, which has a market value of $1.5 billion.

Chalco has expanded at a frenetic pace as Beijing consolidates a fragmented, energy-intensive industry, trying to become a major aluminium player along the lines of Alcan and Alcoa -- an 8% shareholder -- with prices for its main product alumina coming under pressure.

Under the merger plan, which requires approval from shareholders and regulators, each Baotou Aluminum share can be swapped for 1.48 Chalco shares, it said in a statement.

That means each Baotou Aluminum share can fetch 34.16 yuan ($4.50), based on the last closing price of Chalco's Shanghai-listed shares at 23.08 yuan each, the Shanghai Securities News said. Baotou Aluminum shares last traded at 26.74 yuan apiece.

Shanghai-listed shares in Chalco and Baotou Aluminum have been suspended since June 11 after Chalco proposed a restructuring discussion with Baotou Aluminum -- four-fifths owned by its state parent -- amid speculation Chalco would buy out and take Baotou private.

Chalco has taken private listed units Lanzhou Aluminium and Shandong Aluminium Industry.

Chalco is eyeing Baotou's estimated 300,000 tons of annual aluminium capacity, which could ramp up its own capabilities by almost a 10th.

Shareholders can choose to sell their shares in Baotou Aluminum at 21.67 yuan each in cash, the statement said.