Arconic, the aluminum and titanium products manufacturer formed in 2016, is reportedly nearing a private takeover by private-equity interests. Apollo Global Management is reported to have the advantage among several other PE firms that have submitted buyout proposals for the company, which consists of former Alcoa engineered products operations.
Via its forging, ring rolling, casting, additive manufacturing, and other manufacturing capabilities, Arconic is a significant supplier of lightweight components for aerospace and automotive markets.
The business has a market capitalization of $10.6 billion and total debt of $6.3 billion, which would indicate one of the largest privatization moves ever for a public company. In addition to Apollo Global Management, other bidders reportedly interested have been Blackstone Group, Carlyle Group, and Onex Corp., all of which have assets in the major industrial sectors.
A twist in the takeover, however, are the liabilities Arconic may face concerning its supply of aluminum panels that cladded the Grenfell Tower in London, an apartment building that burned catastrophically in June 2017, killing 79 residents. The panels have been cited among other issues as a factor responsible for the rapid spread of the fire.
One reported tactic may be to sell the Arconic Architectural Products subsidiary (which produces the Reynobond panels) separately to private investors before carrying out the privatization. The interest of private-equity group Elliot Management in connection to such a transaction has alarmed U.K. lawmakers that see the move as an attempt to dodge responsibility for numerous claims of wrongful death.
Elliot Management has a reputation for enduring protracted legal action to avoid full payment of liability claims.