Arconic officials announce sale of company to Apollo Funds

“Change always makes people nervous and uncomfortable. A change like this is no exception. It is my hope that with the power deal that was reached with NYPA, any business here in the Massena area would have a strong advantage in its production with the low cost of energy,” Mayor Gregory M. Paquin said.

United Steelworkers members approved a four-year contract with Arconic in June 2022. The deal runs through May 15, 2026. The agreement included, among other benefits, a 7% wage increase for all job grades in May 2022, and 4.5% wage increases in May 2023, May 2024 and May 2025.

“We have been assured that the contract will remain in place. All of the negotiated benefits will continue, with no changes,” United Steelworkers Local 420-A President Mark A. Goodfellow said.

The all-cash transaction values the company at an enterprise value of approximately $5.2 billion. The transaction includes a minority investment from funds managed by affiliates of Irenic Capital Management.

The transaction is expected to close in the second half of 2023, subject to customary closing conditions, including approval by Arconic shareholders and receipt of regulatory approvals. After completion of the transaction, Arconic’s shares will no longer trade on the New York Stock Exchange, and Arconic will become a private company.

“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. We are pleased to reach this agreement with Apollo,” Fritz Henderson, chairman of the Arconic Board of Directors, said in a statement. “The Board decided to approve this transaction after thorough and thoughtful review of a range of value creation opportunities for shareholders.”

Arconic officials said strategic investments are expected to include upgrades to key machine centers “to maximize the full potential of the Company’s unique production capabilities”; technology upgrades to bring the company’s plants and process controls to state-of-the-art standards; and investments in projects that will provide for a cleaner environment in the communities where the company operates.

Arconic was formed in 2016 in a split with Alcoa, creating two publicly traded companies — Alcoa Corp. and Arconic. The upstream company, which operates under the Alcoa name, consists of five business units that make up global primary products — bauxite, alumina, aluminum, casting and energy. Arconic, the value-added company, is composed of global rolled products, engineered products and solutions, and transportation and construction solutions.

With the split, Alcoa focused on upstream products, including aluminum, while Arconic focused on engineered products, including the automotive and aerospace segments.

Arconic announced in December 2019 that its Rolled Products Corp., which makes aluminum sheets and plates, had publicly filed a Registration Statement with the U.S. Securities and Exchange Commission in connection with a pending separation into two stand-alone, publicly-traded companies.

Arconic Rolled Products Corp. was renamed Arconic Corp., and focused on serving ground transportation, aerospace, construction and packaging markets.

The business currently comprising Arconic Inc.’s Engineered Products and Forgings segment remained in the existing company, but was renamed Howmet Aerospace Inc. upon separation. It focuses on structural parts for airplanes and defense, as well as forged aluminum wheels for commercial transportation.

The sale does not impact Alcoa operations in Massena. Then Gov. Andrew M. Cuomo announced in March 2019 that Alcoa would continue to have a presence in Massena until 2026 under a seven-year agreement. The previous agreement, announced in November 2015 and signed in 2016, had been set to expire on March 31, 2019.

Alcoa and the United Steelworkers are currently in negotiations on a new contract, and are set to resume talks on Monday. The current contract expires on May 15.