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By Michael Flaherty
April 24 (Reuters) - The shareholder battle between specialty metals maker Arconic Inc and Elliott Management took another turn on Monday after the company said the hedge fund has twice turned down an offer to add two of Elliott's nominees to its board.
Since early this year, the two sides have been locked in a brutal battle for control of the company's board, with Elliott nominating five directors.
Arconic announced on Monday that after last week's resignation of its chief executive and chairman, Klaus Kleinfeld, it was postponing its annual meeting from May 16 to an unspecified day at the end of the month.
Kleinfeld resigned after sending a letter to Elliott founder Paul Singer this month that Arconic's board did not approve and that the hedge fund deemed threatening.
The $10 billion company, which separated from aluminum maker Alcoa Corp last year, also said on Monday that it was willing to nominate two of Elliott's director candidates to its board, but that the hedge fund had twice turned down the offer.
The latest rebuff came after Kleinfeld's resignation prompted Elliott, Arconic's largest shareholder, to add a term to an attempted settlement agreement that would give Elliott nominees majority representation on a new operations committee within the board of directors.
Elliott has previously demanded, as part of the settlement talks, that Arconic's board designate three of the hedge fund's nominees to the CEO search committee, the company said on Monday.
Arconic said that as long as Elliott's nominees are willing to be interviewed by the company, the board will appoint the best two for the job, offering a deadline of April 26.
"We would prefer to settle the proxy contest on reasonable terms consistent with good governance, but we are not willing to agree to inappropriate conditions that give you undue influence" and are not in shareholders' best interests Arconic said in an email to Elliott, which it released as part of its announcement on Monday.
Elliott's battle with Arconic is the most contentious U.S. proxy battle so far during the spring annual meeting season for publicly traded companies. The hedge fund's campaign directly targeted Kleinfeld, called for his removal as CEO, and criticized his track record.
Arconic has fought back, though the battle took a bizarre turn when Kleinfeld's letter to Singer surfaced last week. The two sides did not disclose the letter at first, but a few days later, Elliott made it public after a media report on its contents.
In vague hints throughout his April 11 letter, Kleinfeld accused Singer of misbehaving at the 2006 World Cup in Germany.
Elliott, which holds 13.2 percent of Arconic stock, was not immediately available for comment on Monday.
Kleinfeld has since stepped down from the boards of Morgan Stanley and Hewlett Packard Enterprise Co.
(Additional reporting by Ankit Ajmera in Bengaluru; Editing by Sai Sachin Ravikumar and Andrew Hay)