Arconic to become an Apollo Group company

Pittsburgh-based Arconic Corp. has entered into a definitive agreement to be acquired by funds managed by affiliates of New York-based Apollo Global Management Inc. The deal is an all-cash transaction that values the Arconic at approximately $5.2 billion.

Arconic, which makes aluminum sheet, plate, extrustions and products, completed its spinoff from Alcoa in early 2020. The tracks companywide scrap utilization rates across all its product lines, including at its Global Rolled Products (GRP) facility in, Alcoa, Tennessee, which the firm says is one of the largest used beverage can (UBC) recycling facilities in North America. At the GRP plant, the company consumes UBCs as well as what it calls Class 1 and 3 scrap from can sheet customers.

Arconic joins Japan-based portfolio company Showa Aluminum Can Corp. within the Apollo Group. In late 2021, Showa acquired the aluminum rolled and extruded products operations of Japan-based conglomerate Mitsubishi Aluminum Co. Ltd.

On the plastics recycling side, in early 2022, funds affiliated with Apollo Global acquired a majority stake in South Carolina-based packaging producer Novolex, a manufacturer of packaging products made with fiber, renewable, recycled and bio-based materials and resin that are designed to be recycled and composted.

The Arconic agreement provides that, 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.

“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,” Arconic CEO Tim Myers says. “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 represents a realization of value for Arconic shareholders at a meaningful premium and enables the company to execute its long-term strategic vision,” adds Fritz Henderson, board chair of Arconic.

An Apollo Group list of strategic investments it is considering includes: upgrades to “key machine centers” to boost production, technology upgrades to bring the company’s plants and process controls and 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,” says Gareth Turner, a partner at Apollo Global Management. “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.

“As aluminum continues to win share in markets seeking sustainable, high-performing material across a wide variety of applications, we believe there is a strong runway for growth in markets throughout the world. We are looking forward to supporting Arconic’s experienced team with our resources and knowledge in the sector to help the company achieve its long-term goals.”

In the first quarter of this year, Arconic recorded sales of $1.9 billion, down 12 percent year over year, tied in part to the divestment of operations in Russia. The firm’s net income of $25 million in this year’s first quarter also was down from $42 million in the first quarter of 2022.

The Apollo transaction is expected to close in the second half of this year, subject to closing conditions, approval by Arconic shareholders and regulatory approvals. The transaction includes a minority investment from funds managed by affiliates of New York-based Irenic Capital Management.