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Transaction between Hydro and Vale in the aluminum area should be completed today

Norsk Hydro ASA (Hydro) expects to complete today, February 28, 2011, the transfer of the aluminum business of Vale S.A. (Vale).

In this regard, Hydro's Board of Directors decided to issue approximately 448 million shares to Vale, through Vale Austria Holdings GmbH, a wholly-owned subsidiary by Vale, as part of the payment for this historic transaction, in which Hydro takes over Vale's bauxite, alumina and aluminum businesses in Brazil, as previously announced in May 2010.

The transaction will provide Hydro with high quality assets in Brazil, including control and full ownership in Mineração Paragominas, one of the largest bauxite mines in the world, 91% of the largest alumina refinery in the world, Alunorte, 51% of the factory aluminum and 81% of the CAP alumina refinery project. The transaction also includes additional bauxite licenses and a bauxite purchase agreement corresponding to Vale's 40% stake in the MRN bauxite mine, located in western Pará.

“This is a historic day for Hydro, which marks the beginning of a new era as a fully integrated and truly global aluminum company. This transaction will transform Hydro, which will have the necessary resource base to continue to play an active and firm role in the promising and growing aluminum industry, ”says Hydro President and CEO Svein Richard Brandtzæg.

Hydro now establishes its position in three strategically important and resource-rich world regions: Brazil, Northern Europe and Qatar - each area of distinct importance for Hydro's future growth. “It is with great pleasure that I welcome 4,200 new, highly competent and well-equipped colleagues to ensure a firm course for Hydro in the future”, adds Brandtzæg. & Nbsp;

As part of the transaction, Vale transfers 60% of Mineração Paragominas, 57% of Alunorte, 51% of Albras and 61% of the CAP aluminum refinery project. Before the transaction, Hydro already had a 34% stake in Alunorte and 20% in CAP.

In all, around 4,200 employees linked to Vale's aluminum chain will become part of Hydro as a result of the transaction, representing a significant addition of competence, knowledge and skills in the bauxite, alumina and aluminum business areas. Executive Vice President Johnny Undeli will head Hydro's new Bauxite and Alumina business, based in Rio de Janeiro.

The transaction is valued at approximately USD 5.27 billion at the time of completion. The payment includes 22% of Hydro's share capital - valued at around USD 3.53 billion considering the closing price of Hydro's share of NOK 44.63 (Norwegian Krone) and the exchange rate of 5.66 between NOK and USD in February 25, 2011, about USD 1.08 billion in cash payment to Vale, with Hydro assuming a net debt of approximately USD 660 million from the business transferred at the end of January 2011.

In addition, Hydro undertakes to assume the remaining 40% stake in Mineração Paragominas through two cash payments of USD 200 million each, to be made respectively in 2013 and 2015.

Vale's operations assumed by Hydro will be consolidated in the Norwegian company's accounting as of March 2011 and the results generated by these operations this month will be included in Hydro's first quarter results. A new business area will be created, Bauxite & amp; Alumina, and will include operations related to bauxite and alumina. The Albras aluminum plant will be included in Hydro's Primary Metals business area.

As a partial payment, 447,834,465 shares will be issued to Vale, with a nominal value of NOK 1,098 each. After the transaction is completed, Hydro's new share capital will be NOK 2,271,760,107,048, divided into 2,068,998,276 shares, with a par value of NOK 1,098 each. Hydro holds 33,387,070 own shares and the number of remaining shares will therefore be 2,035,611,206.

The two largest shareholders of Hydro will become the State of Norway, represented by the Ministry of Industry and Commerce, and Vale, with 34.3% and 21.6%, respectively, of the shares issued, corresponding to 34, 8% and 22.0% of the shares available on the market.

According to the agreement previously signed between Hydro and Vale, Vale agreed not to increase its stake in Hydro beyond 22%, to keep its shares in Hydro for at least two years after the transaction was completed and, after this two-year period, do not sell shares that represent more than 10% of the shares issued by Hydro to any group or single buyer. & nbsp;

Under the agreement, Vale has the right to have a representative on Hydro's Board of Directors. The Executive Director of Base Metals Operations at Vale, Tito Martins, was elected member of the Board by the Hydro Corporate Assembly.He will join the Hydro Board as its tenth member immediately after the transaction is completed.

This text is machine translated. To view the original Portuguese text, click on PT on the top right of this window

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