By Rhiannon Hoyle and Elias Schisgall
Alcoa has agreed to buy South32's bauxite, alumina and aluminum operations across Australia, Brazil and South Africa in a cash-and-stock deal valued at up to $5.6 billion.
The deal secures the prized bauxite and alumina assets near Alcoa's own plants in Western Australia, while establishing a new foothold for the company in South Africa. The acquisition also includes South32's stakes in alumina and aluminum operations in Brazil that Alcoa already owns.
Pittsburgh-based Alcoa will pay South32 $3.1 billion in cash upfront, alongside roughly 17.0 million newly issued shares valued at around $1.0 billion, the companies said in separate statements. Alcoa will also assume about $750 million in net debt and lease liabilities, South32 said.
The companies agreed to possible future payments totaling up to $750 million tied to annual alumina and aluminum price performance through 2030.
"We think that we are acquiring fantastic long-term assets at a really reasonable price," Alcoa Chief Executive William F. Oplinger told analysts on a call.
The sale excludes the Mozal aluminum smelter in Mozambique, which South32 idled in March and is also considering selling.
Oplinger called the deal "a defining moment" for Alcoa and its shareholders. "It strengthens our leadership as a pure-play upstream aluminum company," he said.
Alcoa expects the transaction to be accretive to earnings per share and free cash flow immediately upon closing, which is slated for the first half of 2027.
For Australia-based South32, the transaction sharpens its focus on copper, zinc, silver and lead operations that it says offer the highest-margins and have options for growth.
The company said it intends to allocate approximately $500 million toward a special dividend, with additional shareholder returns to be considered once the deal completes.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com and Elias Schisgall at elias.schisgall@wsj.com