Arconic confirms deal to be acquired by Apollo, for 33% premium

By Mike Murphy and Tomi Kilgore

Deal to buy Arconic values the aluminum company at an enterprise value of $5.2 billion

Shares of Arconic Corp. soared Thursday, after the aluminum company confirmed an agreement to be acquired by private-equity firm Apollo Global Management Inc., in a deal that implies an enterprise value for Arconic of $5.2 billion.

Arconic also reported a first-quarter profit that missed expectations but revenue that beat.

Under terms of the deal, Arconic shareholders will receive $30 for each Arconic share they own, which represents a 33% premium to Wednesday's closing price of $22.55.

The Wall Street Journal had reported late Wednesday that a deal was close, after reporting in February that the companies held talks.

Arconic's stock (ARNC) shot up 28.7% in premarket trading Thursday, putting them on track to open at a nine-month high. Apollo shares (APO) shed 1.5% ahead of the open.

Pittsburgh-based Arconic, which was spun off from Alcoa Corp (AA) in 2016, had a market value of about $2.38 billion as of Wednesday, according to Dow Jones Market Data, but has a debt load of more than $1.5 billion, according to the Journal. With about 99.4 million shares outstanding as of Feb. 17, the $30-per-share buyout price implies a market capitalization for Arconic of $2.98 billion.

Arconic also reported Thursday first-quarter net income that fell to $25 million, or 24 cents a share, from $42 million, or 39 cents a share, in the same period a year ago. The FactSet consensus was for earnings per share of 31 cents.

Revenue declined 12% to $1.93 billion, above the FactSet consensus of $1.85 billion, boosted by strength in aerospace markets. Rolled products revenue fell 17% to $1.5 billion while building and construction systems revenue rose 5.8% to $308 million.

Arconic shares are up 6.6% year to date through Wednesday, but are down 19% over the past year, compared with the S&P 500's 6.5% rise in 2023 and nearly 5% decline over the past 12 months.

-Mike Murphy

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05-04-23 0720ET

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