Arconic Inc. directors voted down a $10.7-billion takeover proposed by Apollo Global Management, the private-equity firm that had been working to privatize the aluminum and titanium products manufacturer over the past several months. One analysis projected the $22.20/offer would be worth $15 billion, including debt assumptions. And would have comprised one of the largest privatizations in recent history.
Apollo Global Management specializes in leveraged buyout transactions, distressed-asset purchases, corporate restructuring, and industrial consolidations.
According to several sources, Apollo had assembled the financing necessary to back up its offer, including liability coverage for a catastrophic 2017 fire in London that may implicate some Arconic building products.
“We did not receive a proposal for a full-company transaction that we believe would be in the best interests of Arconic’s shareholders and other stakeholders,” chairman John Plant explained in a statement.
Reportedly, Arconic will seek a new buyer for its building products business.
Arconic was formed in 2016 through the break-up of Alcoa Inc.: the group’s mining, refining, and primary aluminum production remained in one portfolio; the rolled products, engineered products, and transportation and construction product lines formed the new business. Via its forging, ring rolling, casting, additive manufacturing, and other manufacturing capabilities, Arconic is a significant supplier of lightweight components for aerospace and automotive markets.
The directors’ rejection drove down Arconic stock (which had been buoyed by the anticipated takeover) and surprised industry analysts.
The takeover plan had been initiated last year in part because Arconic has been fighting a proxy battle with a current private-equity investor, Elliott Management Corp. Arconic CEO Chip Blankenship, who has his position in part because Elliott effectively drove out the previous CEO, continues to conduct a strategic and portfolio review of the business.