QCBJ Newsmakers: Arconic going private in $5.2B deal

This story is part of the QCBJ’s Newsmakers edition. This year-end wrap-up from the staff of the Quad Cities Regional Business Journal includes some of the biggest stories we brought you in 2023. It's also a tradition by our parent company, Corridor Media Group, based in North Liberty, Iowa. This story was originally published in May 2023.

---

Arconic Corp. is being bought by Apollo Global Management Inc. in a deal valued at about $5.2 billion, the aluminum-products maker announced on Thursday, May 4. The deal is expected to close later this year and is subject to customary closing conditions, including approval by Arconic shareholders and receipt of regulatory approvals. It’s not publicly known how the deal will impact the Arconic Davenport Works plant, located at 4879 State St., Riverdale, which is a major employer in the Quad Cities region. Local Arconic leaders referred all questions to corporate communications.  Tracie Gliozzi, vice president of corporate communications at Pittsburgh-based Arconic, told the QCBJ Thursday morning that Arconic could not provide any information on how the deal may impact the local plant. But an official with the United Steelworkers union Local 105, which represents about 1,800 workers at Arconic Davenport Works, said the deal may have no impact on the local plant. “It shouldn’t impact us at all. But we’re still gathering information on this right now,” Lee Shaffer, Local 105 guide, told the QCBJ Thursday morning. Arconic’s stock was up more than 27% Thursday morning to about $28.74 a share. Aluminum products maker Arconic is the eighth-largest employer in the Quad-Cities, with 2,400 union and nonunion employees, according to the company. Arconic has about 13,400 employees throughout the company. Apollo is a global private equity firm. Founded in 1990 by Leon Black, Josh Harris and Marc Rowan, it provides investment management and invests in credit, private equity, and real assets.  The agreement provides that Arconic shareholders will receive $30 per share in cash, which represents a premium of approximately 36% to the company's undisturbed closing stock price on Feb. 27. Upon completion of the transaction, Arconic's shares will no longer trade on the New York Stock Exchange, and Arconic will become a private company. Arconic, which supplies materials to Boeing Co. and a number of industries, had rebuffed an almost $10 billion offer from Apollo in 2018, according to a report from the Reuters news service. “This transaction represents a realization of value for Arconic shareholders at a meaningful premium and enables the company to execute its long-term strategic vision. We are pleased to reach this agreement with Apollo,” Fritz Henderson, chairman of the Arconic Board of Directors, said in the news release. “The board decided to approve this transaction after thorough and thoughtful review of a range of value creation opportunities for shareholders.” Apollo’s strategic investment goals for Arconic are expected to include:

• Upgrades to key machine centers to maximize the full potential of the company’s unique production capabilities.
• Technology upgrades to bring the company’s plants and process controls to state-of-the-art standards.
• Investments in projects that will provide for a cleaner environment in the communities in which the Company operates.

“Arconic’s talented management team and employees operate a set of premier global assets serving markets that are growing. We are committed to investing significant capital in the company to secure its competitive position and world-class product offering to continue building on Arconic’s journey,” Gareth Turner, partner at Apollo Global Management, said in a release. Tim Myers, Arconic CEO, added: “In the more than three years since we became a standalone company, we have shown the capabilities and potential of Arconic’s employees and assets. Our unique product portfolio in an industry with significant potential for growth across the markets we serve positions us to deliver substantial value to our customers and the end users of our products. “This transaction will provide Arconic with the backing of one of the world’s premier investment firms and will allow us to leverage Apollo’s industry expertise and relationships to pursue our long-term strategic goals,” Mr. Myers said. “I look forward to working with their team to create opportunities for our employees and provide value to our customers.” Itai Wallach, partner at Apollo, added: “We have tremendous respect for Arconic and its people and are fully committed to continuing Arconic’s unwavering support for its employees throughout the world through a strong culture of employee engagement, respecting and protecting the collective bargaining process and by focusing on strengthening the security of the company’s pension plans, such that the company’s commitments remain secure.” In addition, Arconic on Thursday, May 4, reported its first quarter results. Those quarterly results include: sales were $1.9 billion, down 12% year over year and up 6% organically due to strength in aerospace, packaging, and ground transportation sales partially offset by weak industrial sales. The company reported net income of $25 million, or 24 cents per share, compared with $42 million, or 39 cents per share in first quarter 2022. “Our first quarter results were underpinned by improved operational performance. Aerospace market strength drove much of the growth and ground transportation sales continued to improve sequentially, and we optimized product mix and controlled costs in Europe,” Mr. Myers said in a separate earnings release.

NEWSMAKERS UPDATE

Arconic: New owners, same mission for the customers

Pittsburgh-based Arconic, with Quad Cities operations in Riverdale, Iowa, has a new owner, but the local company’s overall goals have not changed this year. “Under the new ownership structure, we continue to operate as Arconic, delivering for our customers as we always have,” Marguerite Tomlin, a communications specialist with Arconic Davenport Works operations, told the QCBJ. That new ownership structure has been the center of attention for many people in the business world for much of 2023. In May, a purchase agreement was announced with the private-equity firm Apollo Global Management agreeing to buy Arconic. The $5.2 billion deal was finalized in August. As a result of the transaction’s completion, the company now is privately owned and Arconic’s common stock no longer trades on the New York Stock Exchange. However, for much of the year, local Arconic workers have been busy with other matters. For instance, this has been a year of celebration as it hosted many events in conjunction with the 75th anniversary of Arconic Davenport Works. Part of that celebration continued in early October when John Riches, public affairs manager for the local Arconic, received the Legends in Manufacturing Award at the Iowa Association of Business and Industry's Manufacturing Conference on behalf of that 75th anniversary. “As one of Iowa’s largest industries, manufacturing contributes $38 billion annually to the state’s economy,” ABI President Mike Ralston said in a news release. “It’s an honor to recognize the founders and leaders of these amazing Iowa companies, and to thank them for the outstanding contributions they make to our state.” Local Arconic workers have also been busy attracting new generation employees to the company. As part of Manufacturing Month events in October, Arconic workers met with local students and told them about the skills needed in today’s workforce at the company. The local Arconic plant opened in 1949 and spans a 400-acre facility in Riverdale on the Mississippi River. — Dave Thompson