American aluminium major Alcoa declared that the long-awaited split into separate value added and upstream entities will occur on November 1, 2016. The date was set after Alcoa’s board of directors approved the overall separation plan.
Alcoa’s separation will be carried out by a pro rata distribution by Alcoa Inc. of 80.1 percent of Alcoa’s outstanding common stock. Arconic will keep the remaining 19.9 percent of Alcoa’s common stock. The firm says the distribution is meant to qualify as a tax-free transaction to Alcoa shareholders for purposes of United States income taxes.
Alcoa will change its name to Arconic Inc. and its ticker symbol on the New York Stock Exchange to ARNC on November 1 as well. Alcoa will continue to trade as an independent company on the New York Stock Exchange under the ticker symbol AA.
The firm previously announced plans to undertake a reverse stock split of Alcoa common stock at a ratio of 1 for 3, and a proportionate reduction in the number of authorized shares of its common stock. Alcoa says it will hold a special shareholder meeting this coming Wednesday to seek approval of this reverse stock split and authorized share count reduction.
According to the press release, if the reverse stock split is approved, Alcoa shareholders will receive one share of common stock in the new Alcoa for every three shares of common stock held in the old Alcoa as of October 20. If the reverse stock split is not approved, Alcoa shareholders will receive one share of new Alcoa common stock for every nine shares of old Alcoa common stock held as of October 20.
As previously announced, Alcoa’s current chairman and CEO Klaus Kleinfeld will serve as Arconic Chairman and CEO. Michael Morris will become non-executive Chairman of Alcoa Corporation, and Roy Harvey, current Group President of the Alcoa Global Primary Products business, will become its CEO.