Alcoa announced that it has entered into a definitive agreement to acquire South32’s interests in bauxite mine, alumina refinery, and aluminum smelter operations. The transaction includes upfront consideration of approximately $4.1 billion in cash and stock. The deal represents an implied enterprise value of approximately $4.7 billion when including net debt primarily related to normal course financing leases.
Alcoa also agreed to provide South32 with a contingent value right of up to $750 million, with payments based on agreed revenue-sharing linked to future alumina and aluminum prices.
The acquisition is expected to reinforce Alcoa’s position as a leading pure-play upstream aluminum company.
The assets being acquired include South32’s interests in the Boddington bauxite mine and Worsley alumina refinery in Western Australia; the Hillside aluminum smelter and idled Bayside smelter property in South Africa; and the Mineração Rio do Norte bauxite mine and Alumar alumina refinery and aluminum smelter in Brazil.
The transaction excludes South32’s Mozal aluminum smelter in Mozambique.
Alcoa said the acquisition will add high-quality, low-cost, and globally diversified mining, refining, and smelting assets.
The deal is expected to strengthen Alcoa’s mine-to-metal platform, expand its global footprint, and improve its ability to generate sustainable long-term shareholder value.
The transaction is also expected to enhance Alcoa’s position in strategically important regions while improving security of supply for customers.
Alcoa expects the acquisition to generate approximately $900 million in net present value synergies.
A significant portion of the anticipated synergies is expected to come from consolidating life-of-asset planning across the Western Australia mining and refining operations.
The transaction also consolidates South32’s Brazilian joint venture interests in the Alumar alumina refinery and aluminum smelter.
It also provides Alcoa with growth opportunities and an entry point into South Africa through a globally competitive aluminum smelter.
Upon closing, Alcoa expects to be a leading global alumina and aluminum producer with calendar year 2025 pro forma production of 3.2 million metric tons of aluminum and 14.8 million metric tons of alumina.
The acquisition is expected to improve Alcoa’s pro forma position on the global aluminum and alumina cost curves.
It is also expected to be accretive to Alcoa’s earnings per share and free cash flow immediately following closing.
Under the agreement, Alcoa will pay South32 $3.1 billion in cash and approximately 17 million newly issued Alcoa common shares carrying an implied value of approximately $1 billion.
The newly issued shares will represent approximately 6% of Alcoa’s outstanding shares after issuance.
South32 may receive up to $750 million under the contingent value right if average alumina or aluminum prices exceed agreed strike prices across four successive annual periods beginning July 1, 2026.
Upon closing, South32 will distribute at least half of the Alcoa shares received directly to eligible South32 shareholders through an in-specie distribution.
Alcoa has secured fully committed financing for the transaction through an initial $3.1 billion bridge commitment from Goldman Sachs.
The company plans to replace the bridge commitment with cash from its balance sheet and permanent debt financing before closing.
The transaction is expected to close in the first half of 2027, subject to South32 shareholder approval, required regulatory approvals, and other customary closing conditions.
The transaction has been unanimously approved by the boards of directors of both Alcoa and South32.
Goldman Sachs is acting as Alcoa’s financial advisor.
Ashurst Perkins Coie, Davis Polk & Wardwell, and Cleary Gottlieb Steen & Hamilton are serving as legal advisors to Alcoa.
KEY QUOTES:
“This is exactly the type of opportunity Alcoa is built to execute. These high-quality, globally relevant assets are a strong strategic fit within our portfolio and align directly with our strengths as a leading pure-play upstream aluminum company. With our proven operating model and global capabilities, we are well positioned to enhance performance, unlock value, and support their long-term success within Alcoa.”
“Alcoa is defined by how we operate, combining operational excellence, commercial discipline, and a values-based approach that prioritizes safety, reliability, and partnership. By investing in this opportunity, we are underscoring our commitment to supply security for our customers, strengthening the communities in which we operate, and delivering responsibly produced materials that are essential to the global economy.”
William F. Oplinger, President and CEO of Alcoa
“The Board is pleased to support this transaction, which we believe strengthens Alcoa’s competitive position, supports long-term earnings and cash flow growth, and creates lasting value for our shareholders. We remain committed to the employees and stakeholders whose contributions are central to the success of these operations.”
Thomas J. Gorman, Chairman of the Board of Alcoa
