Apollo and Irenic Take Arconic Private

Apollo and Irenic Take Arconic Private

The buy of the lightweight metals specialist values the business at $5.2 billion or 7.4x adjusted EBITDA

Arconic specializes in lightweight metals with a focus on high-performance aluminum, titanium, and nickel-based alloy products that are used in aerospace, automotive, defense, and construction applications.

SOURCE: Arconic

Publicly traded Arconic Corporation has agreed to be acquired by Apollo and Irenic Capital Management in an all-cash transaction that values the company at $5.2 billion.

Arconic (NYSE: ARNC) is a manufacturer of lightweight metals with a focus on high-performance aluminum, titanium, and nickel-based alloy products that are used in aerospace, automotive, defense, and construction applications.

Source: Arconic

The company, led by CEO Tim Myers, is headquartered in Pittsburgh, Pennsylvania. In FY 2022, Arconic had revenues of $9 billion and adjusted EBITDA of $706 million. Based on the $5.2 billion enterprise valuation, this results in a valuation multiple of 7.4x.

Arconic Inc. became a stand-alone company in November 2016 when it was spun out from publicly traded Alcoa (NYSE: AA). In January 2020, Arconic Inc. separated into two companies, Arconic Corp. and Howmet Aerospace.

“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,” said Mr. Myers. “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.”

Apollo will support upgrading Arconic’s machining equipment and technologies to bring the company’s plants and process controls to state-of-the-art standards. “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,” said Gareth Turner, a partner at Apollo.

Source: Arconic

“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,” added Mr. Turner. “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.”

New York City-headquartered Apollo (NYSE: APO) has more than $513 billion of assets under management and more than $83 billion dedicated to private equity. The firm has acquired more than 350 companies since its founding in 1990.

Irenic Capital is an activist investor in small to mid-cap public companies. The firm was founded in 2021 and is led by co-founders Adam Katz, previously an associate portfolio manager at Elliott Management, which actively invested in both Alcoa and Arconic beginning in 2015; and Andy Dodge, a former investment partner at Indaba Capital Management. In addition, Josh Nadell, the former CFO of Elliott Management, is a partner and CFO of the firm. Irenic Capital is backed by the Fribourg family, owners of Continental Grain Co., and is headquartered in New York City.

Evercore Group and Goldman Sachs are the financial advisors to Arconic on this transaction. J.P. Morgan Securities and Wells Fargo Securities, are acting as co-lead financial advisors to Apollo. BMO Capital Markets, Mizuho Securities and TD Securities are also serving as financial advisors to Apollo.

This transaction is expected to close during the third quarter of 2023.

© 2023 Private Equity Professional | July 27, 2023

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