Alcoa strikes $3.1b cash-and-stock deal for South32’s key aluminium assets

Alcoa Corporation is acquiring South32’s key aluminium assets in a USD 3.1 billion deal in cash plus 17,008,960 Alcoa shares, expanding its upstream aluminium portfolio across Australia, Brazil and South Africa. The transaction will also give South32 and its shareholders an equity interest in the enlarged Alcoa business, while backing South32’s broader shift towards copper and other base metals. The update follows Alcoa’s decision to acquire South32’s aluminium value-chain assets with an implied enterprise value of up to USD 5.6 billion.

Under the proposed transaction, South32 will initially receive about 6 per cent of Alcoa’s outstanding common stock. At least half of these shares are expected to be distributed to South32 shareholders through an in-specie dividend.

Depending on South32’s subsequent capital management decisions, shareholders could ultimately retain at least around 3 per cent ownership in Alcoa, taking part in the enlarged aluminium business.

The deal also includes a contingent value right (CVR) that could see Alcoa pay South32 up to an additional USD 750 million in cash. The payment would apply if alumina and aluminium prices exceed agreed strike levels over four successive years beginning July 1, 2026.

South32 shareholders are scheduled to vote on the disposal of the assets at a meeting in Perth on October 15, 2026.

The transaction covers South32’s 86 per cent stake in Worsley Alumina and the Boddington bauxite mine in Western Australia.

It also includes the Hillside Aluminium smelter and Bayside property in South Africa, along with South32’s interests in Brazil’s MRN bauxite mine and Alumar alumina refinery and aluminium smelter.

However, Mozal Aluminium smelter in Mozambique, remaining on care and maintenance since mid-March, is excluded from the transaction.

For Alcoa, the acquisition is expected to strengthen its vertically integrated position across bauxite mining, alumina refining and primary aluminium smelting in Australia, Brazil and South Africa. The company expects approximately USD 900 million in net present value synergies from the transaction.

Completion of the transaction is targeted for the first half of 2027, subject to shareholder, regulatory and other required approvals.