Shares of Alcoa Corp. (AA) tumbled nearly 5% in the premarket session on Wednesday after the company announced that it would acquire Australian mining company South32 Limited’s bauxite, alumina and aluminum assets in a deal worth up to $5.45 billion.

The deal includes $4.1 billion in upfront cash-and-stock consideration, an implied enterprise value of about $4.7 billion, including debt, and a contingent value of up to $750 million.

The transaction is expected to close in the first half of 2027, the company said.

Alcoa’s Deal Details

Under the deal, Alcoa will acquire South32’s assets in the Boddington bauxite mine, the Worsley alumina refinery in Western Australia, the Hillside aluminum smelter and idled Bayside smelter in South Africa, and the Mineração Rio do Norte (MRN) bauxite mine and the Alumar assets in Brazil. The transaction will exclude South32’s Mozal aluminum smelter in Mozambique, the company said.

The Pittsburgh, Pennsylvania-based company said that this acquisition will expand its portfolio of bauxite, alumina, and aluminum assets and is expected to generate about $900 million in net present value. These are expected to be accretive to Alcoa’s earnings per share and free cash flow immediately following the deal's closing.

Wall Street Take On Deal

Jefferies said that Alcoa's acquisition of South32's assets makes strategic and economic sense, according to a published in Dow Jones Newswire.

The bank said there could still be a risk that Alcoa will issue equity to pay down debt following deal closure, but added that this was not management's base-case plan. However, it could still be a temporary overhang on AA shares, in addition to the risk that South32 shareholders and South32 could also potentially offload the company’s stock they receive as part of the sale, the bank said.

"But we believe this deal will create value for Alcoa shareholders in the longer term," Jefferies added, as per the report. The bank has a ‘Buy’ rating and a $100 price target on Alcoa, indicating almost 92% upside from its last close.

AA Stock: Retail Stance

On Stocktwits, retail sentiment around remained in the ‘bearish’ territory for 24 hours, even as message volume for the ticker jumped 200%, according to platform data.

One user, however, took a bullish stance, saying, “This is a solid acquisition by Alcoa. Sold my last shares on the run to 80+, will be looking to get back in here/lower levels.”

Shares of the company are down nearly 33% in the last month due to aluminum price weakness and broader industry headwinds.