Apollo Global buys Arconic in $5.2B deal

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.