Vale SA (ADR) (NYSE:VALE) Sold Norsk Hydro Investment For $1.8bn


Dallas, Texas 11/15/2013 (Financialstrend) – The global metals and mining company Vale SA (ADR) (NYSE:VALE) has recently announced that it has sold major portion of interest in the aluminum manufacturer Norsk Hydro ASA, for an estimated value of around $1,8 billion, which was acquired in 2011.

In a press release, Vale stated that in this transaction the company disposed about 407.1 million shares for a consideration of 25 kroner (NOK) per share. In an over-allotment option of its entire acquired 40.7 million shares, after the Brazilian based company has exercised the full portion or 22% stake, it has approximately raised NOK 11.2 billion or $1.82 billion.

With the onset of declining commodity prices, the company has taken the decision of disposing of non-core and less profitable assets to pick up margin levels, while keeping other projects on hold and focusing on core iron ore business that generates most of the margins. Earlier during this year, the miner has sold interest valued $1.2 billion in an cargo unit to Japanese based Mitsui & Co. and another $1.5 billion worth disposal made from an asset sale last year where it also include the sale of a Colombian based coal mine and 10 large vessels.

On the NOK 25 a share deal of Norsk Hydro deal, a Banco Bradesco based analyst commented, “We view the likely transaction as positive as it strengthens Vale’s balance sheet, helping to alleviate part of the leverage pressure during an intense period of investment.”

After the sale of recent Norsk Hydro stake, Vale had strengthened its liquid asset position before the likely 30.5 billion-real settlement of Brazilian tax dispute, in which the miner is expected to provide a down payment of 20% of the total amount. Moreover, as per the company Chief Executive Officer, Murilo Ferreira, Vale has sufficient time to make decision regarding the tax dispute before its deadline at the end of this month.