Value-added aluminium firm Arconic Inc. may be only days away from a buy-out by private equity firm Apollo Global Management LLC according to unnamed sources who spoke to Bloomberg late last week.
Per the sources, who spoke from behind the veil of anonymity, the deal would have Apollo buying Arconic’s stock at US$22 per share, while the firm spins off its aluminium cladding business. Apollo seeks to purchase Arconic without the cladding operation in an effort at shielding it from potential liability from the Grenfell Tower fire of two years ago.
The anonymous sources continued by explaining that Arconic’s aluminium cladding business would likely have a majority interest in it purchased by Elliott Management Corp. The cladding portion, which ceased production in the wake of the fatal fire, would then be recapitalized and insured.
Meanwhile, according to sources, Elliott would roll over the 10.7-percent interest it currently has in Arconic as the firm transitions into a private company.
When asked for comment on the matter, representatives from Arconic, Elliott, and Apollo remained silent. One of the sources for the Bloomberg article hastened to caution that the deal is far from settled. Securing financing, stock market volatility, and a breakdown in negotiations over the buyout price are all potential pitfalls standing in the way of a finished deal, they warned.
Sources say Apollo emerged victorious from a competition with another unnamed private equity group by tendering the superior offer. The successful bid will mark the end of Arconic’s short life as a public company, born as the result of a spin off from iconic aluminium firm Alcoa. Almost before the ink had dried on the paperwork, Arconic found itself in the midst of a vicious proxy fight with Elliott Management, ultimately ending with the ouster of Klaus Kleinfeld, the company’s initial CEO.