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Apollo Global Might Announce Arconic Buyout by Mid-January

Zacks Equity Research

Per a Bloomberg article, Apollo Global Management LLC APO is likely to announce a deal to acquire Arconic Inc ARNC by mid-January. Citing people familiar with the matter, the report said that the purchase price is expected to be $22 per share.

Shares of Arconic rallied 9.7% after the news of intended acquisition reached the market. However, the final price is still being decided upon and there are chances of the deal being cancelled.

The companies involved are in discussions to strike a deal that would protect Apollo from one of Arconic’s potential liability related to an apartment fire that happened in London in 2017.

Also, people familiar said that Arconic would have to spin off its cladding business, the division responsible for making aluminium panels, as part of acquisition agreement.

A New York-based hedge fund, Elliott Management Corp., which is part of Arconic’s board, would be buying majority stake in the cladding business. On the other hand, Elliot would roll over 10.7% interest in Arconic as part of the take-private transaction with Apollo, per the article.

Sources also mentioned that the key hurdles in the deal could be securing financing and further stock market volatility.

In August 2018, Apollo had inked an all-cash deal worth $2.6 billion to acquire Aspen Insurance Holdings AHL. The transaction is expected to be completed in the first half of 2019, subject to closing conditions.

The acquisition would boost Apollo’s resources and expertise in financial services such as underwriting capabilities and proficiency, which along with long-standing client relationships have helped Apollo solidify its market position.

This Zacks Rank #5 (Strong Sell) stock has lost around 27% over the past six months compared with 21.6% decline recorded by the industry.

A better-ranked stock in the financial space to consider is Bank of Marin Bancorp BMRC. The company has witnessed slight upward estimate revisions for 2018 for the past 60 days. Additionally, the stock has jumped more than 20% in the past year. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Bank of Marin Bancorp (BMRC) : Free Stock Analysis Report
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Arconic Inc. (ARNC) : Free Stock Analysis Report
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