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Apollo Global Said to Aim for Arconic Deal by Mid-January

Jan. 3, 2019
Buyout firm in talks to buy Arconic for about $22 a share.

Apollo Global Management LLC is in talks to buy Arconic Inc. (IW 500/86) for about $22 a share in a deal that could be reached by mid-January, according to people familiar with the matter.

The private equity firm and aerospace manufacturer are negotiating a transaction that would protect Apollo from Arconic’s possible liability tied to a deadly apartment fire in London in 2017, said the people, who asked to not be identified because the matter isn’t public. The final price is still being negotiated and talks could fall apart, they said.

Arconic discontinued sales of the aluminum panels used on the Grenfell Tower after the blaze amid reports they were a fire hazard. The company would spin off its cladding business -- the entity that made the panels -- as part of a deal with Apollo, the people said.

Elliott Management Corp. would purchase a majority interest in the cladding business, which would be recapitalized and insured as part of the spinoff, the people said. Separately, the New York-based hedge fund would roll over its 10.7% stake in Arconic as part of the take-private transaction with Apollo, they said.

Obstacles to reaching an agreement could include securing financing and further stock market volatility, which has dampened prices, one of the people said.

Representatives for Elliott, Arconic and Apollo declined to comment.

Apollo emerged as the leading bidder for Arconic after trumping an offer from a rival group of private equity investors, people familiar with the matter said in December. The privatization would cap a brief but tumultuous period of independence for Kingston, New York-based Arconic, which makes aircraft and automotive parts.

Since splitting from Alcoa Corp. in 2016, Arconic fought a proxy battle with Elliott and replaced its chief executive officer.

Arconic rose about 10% -- its largest intraday gain since July -- to $18.50 at 3:49 p.m. in New York trading, giving the company a market value of about $9 billion. Its shares had fallen about 37% in the past year before Wednesday’s gains.

Arconic, under Chief Executive Officer Chip Blankenship, put its building and construction systems unit up for sale in July. It also agreed to move its headquarters out of New York City to cut costs.

By Scott Deveau and Kiel Porter

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