Arconic Plunges after Ending Potential Deal with Apollo Global

Arconic Inc. (NYSE: ARNC) announced on Tuesday it won’t pursue a sale of the Company, ending a potential deal with private-equity firm Apollo Global Management.

Arconic shares plunged the most in eight months after the manufacturer said it “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.” Apollo Global Management had been in talks to buy the maker of aerospace and auto parts in a deal valued at more than USD 10 Billion.

The surprise decision deepens the uncertainty surrounding Arconic, which during the last two years has fought a proxy battle with activist investor Elliott Management Corp., replaced its Chief Executive Officer and drew unwanted attention for its connection to a deadly apartment fire in London.

Arconic will now focus on operational improvements and the previously announced sale of the building-systems unit, according to a Company statement Tuesday.

The Company’s stock plummeted 18% to USD 16.62 after falling as much as 21%, the biggest intraday drop since April 30. Arconic tumbled 38% last year, while a S&P’s index of industrial stocks dropped 15%.

Tuesday’s announcement extends Arconic’s brief but tumultuous life as an independent Company since splitting with aluminum producer Alcoa over two years ago. Chief Executive Officer Chip Blankenship, who took the reins early last year, has been conducting a strategic and portfolio review to address what he has called disappointing execution.

Arconic reported USD 10.5 Billion in revenue for the nine months through September and said in October it expected between USD 13.7 Billion and USD 14 Billion in sales for all of 2018. The Company hasn’t said when it will release its fourth quarter and full-year results.

The fallout from the London fire – a tragedy that killed more than 70 people at Grenfell Tower – had been a sticking point in the negotiations with Apollo. The firm, which had emerged as the front-runner after topping an offer from rival private-equity investors, was working to protect itself from ongoing liabilities. Apollo had been pursuing an offer of about USD 22 a share.

2 Comments
  1. Sharai Marie 4 weeks ago
    Reply

    $ARNC’s auction cancellation came despite suitor $APO having all the financing in place to get a deal across the finish line, @rorol says. Apollo was prepared to pay $22.20 a share, or about $11B.

  2. Gurjant Singh 4 weeks ago
    Reply

    $ARNC Elliott had 51.9m shares as of 9/30. Today’s vol <40m. It ain't over

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