Alcoa Corporation announced a definitive agreement to acquire South32 Limited's interests in bauxite, alumina, and aluminum assets for an implied enterprise value of up to $5.6 billion. The transaction involves an upfront consideration of approximately $4.1 billion, consisting of $3.1 billion in cash and approximately 17.0 million newly issued Alcoa common stock, valued at about $1.0 billion. Additionally, South32 may receive up to $750 million through a contingent value right (CVR) tied to future alumina and aluminum prices over four annual periods.
This acquisition will significantly strengthen Alcoa's mine-to-metal platform, expanding its global footprint with high-quality, low-cost assets. The acquired assets include the Boddington bauxite mine and Worsley alumina refinery in Western Australia, the Hillside aluminum smelter in South Africa, and the Mineração Rio do Norte (MRN) bauxite mine and Alumar alumina refinery and aluminum smelter in Brazil. The deal is expected to generate approximately $900 million in net present value synergies through operational optimization and best practices.
For South32, the sale marks a strategic pivot away from aluminum to focus predominantly on upstream base and precious metals, including copper, zinc, silver, and lead. This shift is anticipated to increase South32's pro-forma EBITDA from these commodities to around 85% and cut operational emissions by approximately 95% compared to FY25. The company also expects about 55% production growth from key projects like Taylor and Sierra Gorda's expansion, along with $125 million in annual overhead savings by FY29. South32 plans an initial $500 million fully-franked special dividend through an in-specie distribution of half the Alcoa equity consideration.
The transaction, unanimously approved by both Alcoa's and South32's Boards of Directors, is expected to close in the first half of 2027, pending shareholder and regulatory approvals. Alcoa has secured a $3.1 billion bridge commitment from Goldman Sachs for financing, which it intends to replace with cash from its balance sheet and permanent debt financing. Upon closing, South32 will distribute at least half of the Alcoa shares received to its eligible shareholders.
