BREAKINGVIEWS-Aluminium deal births copper takeover target

Alcoa Corporation

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The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Antony Currie

MELBOURNE, July 1 (Reuters Breakingviews) - South32 was a sprawling "CrapCo" when spun out of BHP in 2015. The $5.6 bln aluminium sale to Alcoa means departing CEO Graham Kerr has created a leaner miner earning most of its money from the red metal. That's likely to attract suitors like Glencore, or even its former parent.

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CONTEXT NEWS

South32 on July 1 said it is to sell most of its aluminium assets to Alcoa at an enterprise value of up to $5.6 billion.

Alcoa will pay $3.1 billion in upfront cash and $1 billion in its own shares. The buyer will also hand over up to $750 million depending on alumina and aluminium prices to 2030. And it will take on $750 million of the unit's net debt and lease liabilities. On top of that, Alcoa will also assume roughly $1.2 billion of so-called rehabilitation provisions.

The transaction marks the end of Graham Kerr's tenure as CEO. He officially stepped down on June 30 after leading the company since it was spun out of BHP in 2015. His successor is Matthew Daley.


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