realfast95
6年前
Elliott Management will likely wage proxy campaign to shake up Arconic
https://nypost.com/2019/01/24/elliott-management-will-likely-wage-proxy-campaign-to-shake-up-arconic/
So you want to protect your retirees’ pensions? That could get you into trouble with the state of Delaware.
Elliott Management — reeling from the surprise rejection of a $10 billion takeover offer for aluminum giant Arconic earlier this week — is discussing a surprising legal argument to revive the deal, The Post has learned.
Specifically, the activist hedge fund headed by billionaire Paul Singer believes that New York-based Arconic decided to reject the bid from buyout firm Apollo Global Management partly because it didn’t adequately cover the company’s pension obligations, according to sources close to the situation.
On the face of it, looking out for workers might have seemed like the right thing for Arconic to do. But legal experts say it conflicts with the law in Delaware, where Arconic is incorporated, which requires boards to focus exclusively on the interests of shareholders, informed sources said.
Sources said the brewing showdown got foreshadowed in 2017 when Elliott successfully pressured Arconic to incorporate itself in Delaware instead of Pennsylvania — largely so that its board would be forced to prioritize shareholders in any takeover situation.
Nevertheless, in its Tuesday rejection of Apollo’s takeover bid of $22.20 a share — an announcement that blindsided both Elliott and Apollo, according to sources — Arconic said it didn’t get an offer that was “in the best interests of Arconic’s shareholders and other stakeholders.”
A source close to the situation said Elliott “saw the line in the Arconic release about protecting stakeholders and thought it was dumb,” signaling that it looked like legal fodder for Elliott and Apollo.
see also
Arconic's Reynobond PE panels were used in the cladding of the London’s Grenfell Tower apartment.
Arconic shares plunge 25 percent as company cancels auction
In a landmark 1986 decision on hostile takeovers, the Delaware Supreme Court ruled that “concern for non-stockholder interests is inappropriate when an auction among active bidders is in progress, and the object no longer is to protect or maintain the corporate enterprise but to sell it to the highest bidder.”
Now, insiders say Elliott will likely wage a proxy campaign to shake up Arconic’s board. The deadline to nominate directors is Feb. 15.
Arconic’s pension deficit was projected to be $2.5 billion at the end of 2017, according to securities filings. In 2016, Arconic pumped $150 million into its retirement plans as the US Pension Benefits Guaranty Corp., a watchdog agency, voiced concerns about Arconic’s debt load.
Sources said Arconic board members had been concerned that Apollo’s proposal to fund the company’s pensions was about a third less than what it believed was necessary — a shortfall amounting to hundreds of millions of dollars.
As reported by The Post, negotiations had likewise been clouded in recent weeks by liability concerns related to a UK-based Arconic unit, whose construction panels got blamed for the quick spread of the 2017 fire in Grenfell Tower in London that killed 72 people.
Arconic directors also had been concerned that Apollo wouldn’t pay out a $29 million dividend to shareholders after the deal was announced, sources said.
Apollo, Arconic and Elliott declined to comment.
realfast95
6年前
The $15bn buyout of Arconic by Apollo Global Management fell apart due to a last-minute dispute over hundreds of millions of dollars needed to cover pension obligations owed to the US manufacturer’s retirees, according to people involved in the transaction.
The unravelling of what would have been one of the largest leveraged buyouts since the financial crisis had little to do with the potential liabilities related to Arconic’s flammable cladding panels linked to the deadly Grenfell Tower fire in the UK — as many industry observers had speculated.
Instead, the sticking point involved issues investors and analysts had paid little attention to: underfunded pensions, as well as a disagreement over the company’s dividend policy in the period between an announcement of a buyout and its completion.
The decision by Arconic’s board to walk away from the deal at the last minute — up until midday on Monday, the company had agreed in principle to sell itself to Apollo and activist hedge fund Elliott Management — stunned investors. The company’s shares fell more than 16 per cent on Tuesday, wiping $1.6bn off its market valuation.
After seven months of difficult negotiations, the Arconic board was exasperated by an eleventh-hour attempt by Apollo to tweak the terms.
The two sides had agreed to a deal that valued the company at $22.20 a share. The transaction included a commitment for Apollo to fund hundreds of millions of dollars worth of pension liabilities, the people said.
But the figure Apollo presented to the board later that day fell short of their verbal agreement. Apollo committed to funding the pension obligations but ended up offering roughly one-third less than the board believed was necessary, several people said.
Underfunded pensions have dogged a number of industrial behemoths such as Arconic, which was formed in the break up of metals producer Alcoa in 2016.
Arconic reported a projected pension deficit of roughly $2.5bn at the end of 2017, according to a filing with US securities regulators. There were fears that the additional leverage from a private equity takeover could provoke action from the US pension watchdog, the Pension Benefit Guaranty Corporation.
Arconic previously struck a deal with the PBGC in 2016, in which it agreed to pump $150m into its retirement plans. The PBGC, which safeguards private sector pension plans, said at the time that Arconic’s debt load “in addition to the financial condition of the two largest [retirement] plans, created the potential for additional risk to the company and its pension plans”.
Arconic and Apollo were also divided over whether Apollo would let the company continue to pay its 6 cent per share quarterly dividend of $29m after the transaction was announced, several people said. A person familiar with Apollo’s thinking said Arconic had known as early as September that the private equity group did not plan to pay the dividend once the deal was agreed.
Arconic board members were so angered by Apollo’s conduct throughout the talks that in retaliation it issued a terse public statement to end the negotiations on Tuesday, without giving the private equity group notice.
It was a move that surprised Apollo, which was founded by billionaire Leon Black. The private equity group had been preparing a final offer that it planned to deliver on Tuesday, after markets reopened following the Martin Luther King Jr holiday, according to one person involved in the talks. The person added that the goal was to resolve outstanding differences that day.
Apollo, Arconic and Elliott declined to comment.
https://www.ft.com/content/4c82b2dc-1ebb-11e9-b2f7-97e4dbd3580d
realfast95
6年前
Arconic Inc. (NYSE: ARNC) today announced that its Board of Directors has determined to no longer pursue a potential sale of the company as part of its strategy and portfolio review.
John C. Plant, Chairman of Arconic, said, “Together with management, we have been conducting a rigorous and comprehensive strategy and portfolio review over the past year and as part of that process considered a sale of the company, among other matters. However, we 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.”
“We will continue with the previously announced sale process for our Building and Construction Systems business. More broadly, we remain strongly focused on creating value for Arconic shareholders, through continued operational improvements and through other potential initiatives which we have identified in our strategic review.”
coolbug
6年前
Aluminum Market in North America to Hit $17,995.6 Million by 2023 Reaching at CAGR of 5.1%.
Growth in transport industry and technological advancements in aluminum manufacturing technologies and processing equipment are the major factors that drive the growth of the North America aluminum market. Rapid increase in applications in various end-user industries such as construction and packaging further fuel the market growth.
The major key players operating in the North America Aluminum market include Arconic, Alcoa, Norsk Hydro, Rio Tinto Alcan, , Century Aluminum, Novelis, Access Industries, United Company RUSAL, Kaisar Aluminum, and JW Aluminum, and others. The other player includes United Aluminum, GYFORDPRODUCTIONS, LLC, ALUMINERIE ALOUETTE INC., Extrudex Aluminum, and Almag Aluminum.
More At: https://www.bigmarketresearch.com/north-america-aluminum-market
realfast95
6年前
Apollo close to $10.6B deal to buy Arconic
By Josh Kosman
January 17, 2019 | 7:06pm
https://nypost.com/2019/01/17/apollo-close-to-10-6b-deal-to-buy-arconic/?utm_source=twitter_sitebuttons&utm_medium=site%20buttons&utm_campaign=site%20buttons
Apollo Global Management is nearing a deal to buy aluminum giant Arconic in a deal valued at roughly $22 a share, or $10.6 billion, The Post has learned.
The board of New York-based Arconic hasn’t yet approved the buyout, but has told Apollo — headed by billionaire Leon Black — and leading Arconic shareholder Elliott Management to finish necessary paperwork so it can clear the deal this weekend, sources said.
A buyout of Arconic, when including assumed debt, would be valued at more than $15 billion, making it one of the biggest leveraged buyouts since the 2008 financial crisis.
Financing for the deal is fully committed and is being led by Deutsche Bank, a source close to the talks said.
The debt markets have recovered from a winter freeze to the point where a large buyout of a company that makes aluminum parts for the aerospace industry can be done, sources said.
“There was an anxiety attack that receded,” an attorney close to the deal said, explaining that surprisingly strong job numbers this month and decent earnings reports have calmed the debt markets.
Another nagging issue in recent weeks has been the fact that a UK-based unit of Arconic sold construction panels that were blamed for the quick spread of a 2017 fire at Grenfell Tower in London that killed 72 people.
To get the deal done, Elliott Management, headed by activist investor Paul Singer, has agreed to take on the risks itself by acquiring majority control of the construction division that’s saddled with the Grenfell liabilities, sources said.
Nevertheless, insiders say Elliott also recently tangled with two other prospective bidders about the size of the guarantee it would provide.
Elliott was planning to put much less than the $1 billion-plus that a rival bidding team of the Blackstone Group and Carlyle Group felt would be needed to protect Arconic from potential litigation, a source close to the matter said.
Now, the deal will include more than $1 billion to cover potential liabilities, although that may include insurance, a source said.
Scotland Yard is investigating the deadly disaster at the 24-story residential tower in West London, and has found damaging information that might implicate Arconic, The Post reported exclusively in October.
If suits from the victims are filed and are successful, Arconic could be held responsible if damages are not covered by the new Elliott-acquired construction unit, sources said.
Already, the Scotland Yard investigation has hurt the auction and reduced the price Arconic is receiving even after spinning off the construction business.
“What fundamentally has changed the whole auction is the Grenfell Tower investigation,” a source close to the situation said.
Reps for Elliott and Apollo declined to comment. Arconic didn’t return calls.
r clarke
7年前
Not sure how this affects proceedings, but here is the website for the
UK inquiry. They will be looking not only at regulation, but also industry
practice.
In UK, they can charge corporate manslaughter, and/or criminally go after
individuals. They can order fines, or remedial actions.
"Prime Minister set the terms of reference for the Inquiry. At the formal opening of the Inquiry on 14 September 2017, Sir Martin set out a list of issues to be investigated"
https://www.grenfelltowerinquiry.org.uk/wp-content/uploads/2017/08/List-of-issues-to-be-investigated.pdf
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