Apollo Global Management Inc. agreed to acquire aluminum-products company Arconic Corp. for about $3 billion.
(Bloomberg) — Apollo Global Management Inc. agreed to acquire aluminum-products company Arconic Corp. for about $3 billion.
The buyout firm will pay $30 a share for the Pittsburgh-based company, according to a statement Thursday. That’s a premium of 36% to the closing price on Feb. 27, before the Apollo interest was reported.
Shares of Arconic gained 28% at 9:51 a.m. in New York, to $28.76. Arconic’s stock had risen 6.6% for the year through Wednesday’s close, giving the company a market value of about $2.24 billion.
Founded in 1888, Arconic manufactures aluminum sheets and plates for companies across the aerospace, automotive and commercial transportation markets.
In first-quarter financial results also released on Thursday, Arconic reported sales of $1.93 billion, down 12% from a year earlier but ahead of the average analyst estimate of $1.85 billion, according to data compiled by Bloomberg.
Arconic said in a statement that its sales were helped by strength in aerospace, packaging and ground transportation. Rolled products sales were $1.5 billion in the period, down 17% from $1.8 billion a year earlier, while building and construction systems revenue was $308 million, up 5.8% from $291 million in last year’s first quarter.
“Apollo’s interest in ARNC likely focuses on the recovering end-markets in aerospace and automotive,” said Benchmark Co. analyst Josh Sullivan in a research note. He expects that will be seen as a positive for the valuation of peers such as Kaiser Aluminum Corp. and Constellium SE.
The deal has an enterprise value of about $5.2 billion, according to the statement. The transaction includes a minority investment from funds managed by affiliates of Irenic Capital Management.
–With assistance from Timothy Annett.
(Updates with shares in third paragraph, analyst comment in seventh.)
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