Alcoa vs. Alumina Limited: Sterne Agee's Take

Late last week, Bloomberg reported that Alcoa Inc

joint venture partner Alumina Limited was looking to block Alcoa's split into two companies. Alumina sought "unwarranted" concessions due to the pending Arconic segment split, which Alcoa believes has no impact on the joint venture agreement. Alcoa has since, filed suit against Alumina saying that they do not have influence over the pending split. Sterne Agee CRT released a report yesterday giving their take on the legal battle. At first glance, Sterne Agee CRT analysts believe that Alcoa has the upper hand in any legal battle. However, the notion that they did need to file suit gave the sell-side firm caution or risk, due to the the element of split timing. Going into more detail, Sterne Agee CRT analysts had this to say: "Given the JV between the two companies resides entirely in the commodity operations it is hard to see how Alumina is harmed by the separation. Alumina Limited may claim that the JV assumed captive markets for its commodity products through Arconic. However, alumina/aluminum markets are more liquid/globalized than ever. " Shares traded on Tuesday's session were relatively unaffected, trading down 0.86% at $9.27/share.