Alcoa to buy aluminum assets from South32 in deal valued up to $5.6B

[Aluminum Maker Alcoa Plans To Cut 15,000 Jobs]
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Alcoa (AA [https://seekingalpha.com/symbol/AA]) down 1.7% post-market Tuesday after saying it agreed to acquire [https://seekingalpha.com/pr/20569401-alcoa-announces-strategic-acquisition-of-south32-s-bauxite-alumina-and-aluminum-assets-for] South32's (SOUHY [https://seekingalpha.com/symbol/SOUHY]) interests in bauxite mine, alumina refinery, and aluminum smelter operations for ~$4.1B in cash and stock, plus a contingent value right of as much as $750M if alumina and aluminum prices exceed agreed thresholds over the next four years.

Under the deal terms, Alcoa (AA [https://seekingalpha.com/symbol/AA]) will pay $3.1B in cash upfront along with ~17M newly issued shares valued at ~$1B.

The transaction represents an implied enterprise value of ~$4.7B when including net debt primarily related to normal course financing leases, the company said.

Alcoa (AA [https://seekingalpha.com/symbol/AA]) ​will acquire South32's (SOUHY [https://seekingalpha.com/symbol/SOUHY]) individual ​interests in Australia's Worsley Alumina, South Africa's ⁠Hillside Aluminium, Brazil's MRN bauxite mine, Brazil Alumina ​refinery, and Brazil Aluminium smelter, establishing a new presence for the company in South Africa and adding to investments in Australia and Brazil.

Alcoa (AA [https://seekingalpha.com/symbol/AA]) said it is "well positioned to own and operate these assets, given their alignment with its value-creation strategy, operational expertise, and proximity to existing operations," also calling the deal "a logical industry consolidation of like assets."

The company said it expects the acquisition to generate significant synergies of ~$900M in net present value through operational optimization across complementary assets and application of best practices.

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