Arconic To Split Into Two Separate Companies (US)

Aluminum-parts manufacturer Arconic Inc. said it plans to spin off one of its two main business units after rejecting a $10 billion offer for the entire company and abruptly replacing its chief executive. Arconic on Friday didn’t say whether it would aim to divest the aluminum-sheet rolling or aerospace-components unit. The company said smaller businesses that don’t fit into either unit would be sold. “We did not receive a proposal for a full-company transaction that we believe was in the best interests of our shareholders,” Chief Executive John Plant said in the company’s fourth-quarter earnings release. “The board sees more shareholder value creation through a restructuring of the company. Arconic shares dropped 4.4% on Friday to $16.90. The $10 billion offer from private-equity firmApollo Global Management LLC was crafted with input from the company’s largest shareholder, activist hedge fund Elliott Management Corp. Now the board wants to exert greater control over the breakup of the company, a source familiar with the board’s thinking said. The board on Wednesday installed Mr. Plant, 65 years old, who remains board chairman, as CEOin place of Chip Blankenship and elevated director Elmer Doty to chief operating officer. The moves give the board more direct control over the company’s daily operations and influence over the breakup.

“To carry out a new direction that I’ve talked about, it’s appropriate to make a change in leadership. It’s that straightforward,” Mr. Plant said on Friday in a call with analysts.

Breaking up the company could be a longer and more complicated process than selling the whole company in a single transaction, analysts have said. Spinning off a unit as a new public company with shares distributed to existing shareholders can take at least a year.

Spinoffs can also be expensive, generating hundreds of millions of dollars in fees for accountants, lawyers and bankers. Mr. Plant didn’t estimate how much the breakup plan would cost. He said he put a one-year limit on his time as CEO because he is confident the split will be nearly completed a year from now.

Source:
https://www.wsj.com/articles/arconic-eyes-breakup-after-strategic-review-11549634888
Posted in Strategy.

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