King backs Alcoa’s $5.9bn South32 acquisition
Federal Resources Minister Madeleine King has backed Alcoa’s move to acquire South32’s aluminium assets, describing the deal as a vote of confidence in Australia’s resources sector and manufacturing capabilities.
Alcoa has entered into a binding conditional agreement to purchase South32’s interests in a portfolio of bauxite, alumina and aluminium operations, including Worsley Alumina in Western Australia.
The cash-and-stock transaction includes an upfront consideration of approximately $5.9 billion, also including a contingent value right of up to $1.1 billion, with future payments linked to agreed revenue-sharing based on alumina and aluminium prices.
King said the landmark agreement showed Australia remained a leading destination for global resources investment, with the transaction expected to strengthen onshore processing capabilities, secure supply and support local jobs.
“This is a significant moment for our resources sector and shows yet again how the world is choosing Australia as a growth destination,” King said.
For Alcoa, the acquisition will add what the company described as a high-quality, low-cost and globally diversified portfolio of mining, refining and smelting assets, enhancing its mine-to-metal platform and supporting its long-term growth strategy.
Including net debt, primarily related to normal course financing leases, the transaction represents an implied enterprise value of approximately $6.8 billion.
The acquisition is expected to generate approximately $1.3 billion in net present value synergies while immediately improving earnings per share and free cash flow following completion.
Alcoa said the transaction would expand its presence in strategically important regions, reinforcing its operations in Australia and Brazil while establishing a new presence in South Africa.
Alcoa president and chief executive officer William Oplinger said the acquisition was closely aligned with the company’s long-term strategy.
“This is exactly the type of opportunity Alcoa is built to execute,” Oplinger said.
“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 aluminium 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.”
Oplinger said the deal also underscored Alcoa’s commitment to supply security, responsible production and the communities in which it operates.