On July 1, Alcoa declined 5.01% in pre-market trading, trading at $50.54/share, with turnover of $160,100. The drop reflects investor concerns over the valuation of its newly announced mega-deal to acquire South32's aluminum assets.

Alcoa announced an agreement to acquire South32 Ltd.'s bauxite, alumina, and primary aluminum assets for an implied enterprise value of up to $5.6 billion. The transaction structure includes $3.1 billion in cash, approximately $1 billion in Alcoa stock, and the assumption of $750 million in net debt and lease liabilities. The company has secured fully committed financing, with an initial $3.1 billion bridge loan facility in place. Under the agreement, South32 will distribute at least half of the Alcoa shares received directly to its shareholders, with the remainder to be sold at its discretion, resulting in South32 shareholders holding approximately 6% of Alcoa post-close.

While Alcoa stated the deal would be immediately accretive to EPS and free cash flow upon closing, investors remain cautious about the premium paid. The stock had already fallen nearly 5% in Sydney trading prior to the U.S. pre-market session, while South32 shares surged over 10%.

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