Aluminum products maker Arconic in talks to sell itself: sources
(Reuters) – Aluminum products maker Arconic Inc is discussing a takeover bid for the entire company, people familiar with the matter said, even though it announced a sale process last month for only its building and construction systems unit.
It follows Arconic, which was spun out of Alcoa Corp in 2016, said in February that it would conduct a “strategic and portfolio review” to be completed by the end of 2018, but did not provide details on the The details of the content.
Arconic is in talks with private equity firms interested in buying the company, including a consortium of Blackstone Group LP and Carlyle Group LP, another consortium of KKR & Co and Onex Corp, and Apollo Global Management LLC, the sources said. Friday.
Shares of Arconic closed up 4.7 percent on Friday at $22.23 on the news, giving it a market capitalization of $10.7 billion.
Activist hedge fund Elliott Management Corp, which won Arconic’s board representation following a proxy fight last year, was instrumental in pushing the company to seek a sale, the sources said. However, some private equity firms have expressed doubts about the company’s ability to meet high price expectations for a sale, some sources added.
The sources warned that no deal might be reached and asked not to be identified because the matter is confidential.
Arconic, Elliott, KKR and Onex did not immediately respond to requests for comment. Apollo, Carlyle and Blackstone all declined to comment.
The Wall Street Journal first reported last month that Arconic was attracting interest from private equity firms.
Arconic said it will announce the outcome of the strategic review at its Investor Day event in November 2018.
Made of aluminum, titanium or nickel, Arconic’s products are used by aerospace, automotive, commercial transportation and packaging manufacturers around the world.
Pittsburgh-based Arconic is increasingly focusing on aircraft parts as planemakers ramp up production to meet the world’s growing demand for air travel. Some component suppliers are increasing hiring and capital spending to meet delivery targets.
A year after a major fire at London’s Grenfell Tower apartment complex, the company announced plans to sell Arconic’s building and construction systems division, which makes facades, windows and framing products, and which used the company’s Reynobond PE board. More than 70 people died in the blaze.
Higher aluminum prices cut Arconic’s second-quarter operating income by $20 million, Chief Financial Officer Kenneth Giacobbe said on an analyst call last month.
However, sales across Arconic’s three main businesses — transportation and construction, engineered products and global rolled products — rose between 7.5 percent and 14 percent.
Reporting by Harry Brumpton and Greg Roumeliotis in New York; Additional reporting by Joshua Franklin in New York; Editing by Phil Belowitz and Susan Thomas