US: Alcoa announces $4.1 bn acquisition of South32's assets to strengthen global aluminium operations

• Alcoa set to become one of world's largest aluminium producers
  
  
• Australia, Brazil and South Africa assets join global portfolio
  
  

Alcoa Corporation has entered into a definitive agreement to acquire South32's interests in several bauxite, alumina and aluminium assets for an upfront consideration of $4.1 billion, comprising cash and stock. The transaction, which carries an implied enterprise value of approximately $4.7 billion including assumed net debt, also includes a contingent value right (CVR) of up to $750 million linked to future alumina and aluminium prices.

The acquisition covers South32's interests in the Boddington bauxite mine and Worsley alumina refinery in Western Australia, the Hillside aluminium smelter and Bayside smelter property in South Africa, and the Minerao Rio do Norte (MRN) bauxite mine along with the Alumar alumina refinery and aluminium smelter in Brazil. The Mozal aluminium smelter in Mozambique is excluded from the transaction.

The deal is expected to strengthen Alcoa's mine-to-metal portfolio by expanding its global presence across key mining, refining and smelting operations. The company expects the combined asset base to improve operational efficiency, enhance supply chain resilience and generate approximately $900 million in net present value through operational synergies and portfolio optimisation.

Following completion, Alcoa expects to become one of the world's largest upstream aluminium producers, with pro forma annual production of approximately 14.8 million tonnes (mnt) of alumina and 3.2 mnt of aluminium. The company also expects the acquisition to be immediately accretive to earnings per share and free cash flow.

Under the agreement, Alcoa will pay $3.1 billion in cash and issue approximately 17 million new shares, valued at around $1 billion. South32 will also be eligible to receive up to $750 million in additional payments over four years if alumina and aluminium prices exceed agreed thresholds.

Alcoa has secured bridge financing for the cash component and plans to replace it with a combination of balance sheet cash and long-term debt before closing. The transaction has received unanimous approval from the boards of both companies and is expected to close in the first half of 2027, subject to shareholder approval and customary regulatory clearances.