Discussions between Aluminium Bahrain (Alba) and the Saudi Arabian Mining Company (Ma’aden) regarding a potential merger have been called off, marking an unexpected turn in what was once seen as a major deal for the aluminium industry in the Gulf. The two manufacturing giants had been in talks since last year, with hopes of completing a merger by the first quarter of 2025. However, despite an extension of the deadline into the second quarter, both companies confirmed on Monday that the proposed transaction would not move forward.

The decision to terminate negotiations comes as a surprise, especially after a recent extension had been granted to allow for further due diligence. The deal had the potential to create the seventh largest aluminium producer globally, a significant step for both Alba and Ma’aden in their ambitions to expand their reach and capabilities within the global market.

The companies mutually agreed to discontinue discussions, as confirmed by official notices on both the Bahrain bourse and the Saudi stock exchange. This move has raised questions about the reasons behind the abrupt end to the merger, particularly as the companies had been close to finalizing a deal.

Alba, established in 1971 and one of the oldest and largest aluminium smelters in the Middle East, had been seeking to strengthen its position by aligning with Ma’aden, a major player in the mining and metals sector. Alba, which is Bahrain’s largest listed company, operates with a significant stake held by Bahrain Mumtalakat Holding Co and Saudi Basic Industries Corporation (Sabic).

Under the proposed terms of the agreement, Ma’aden was set to transfer its aluminium and bauxite subsidiaries to Alba in exchange for new shares in the company. This strategic move was expected to enhance the combined entity's competitive position globally. Last month, Ma’aden’s shareholders had approved an acquisition deal to purchase Sabic’s entire stake in Alba, valued at around $1 billion, further cementing the prospect of the merger.

Despite the setback with Ma’aden, Alba continues to demonstrate solid financial performance. In its most recent quarterly results, Alba reported a significant increase in profits and revenue, as well as a rise in the price of aluminium on global markets. The company remains one of the largest aluminium producers outside China.

Ma’aden, largely owned by Saudi Arabia’s Public Investment Fund (PIF), has also posted a strong financial turnaround, shifting from a loss in the previous year to a notable profit in the most recent quarter. However, its subsidiary units, Ma’aden Aluminium and Ma’aden Bauxite and Alumina, still face financial challenges with significant debt obligations to PIF.

Although the merger between Alba and Ma’aden is off the table for now, both companies remain pivotal players in the global aluminium market, with ongoing plans for expansion and growth in the sector.