By Svea Herbst-Bayliss and Chibuike Oguh
March 31 (Reuters) – Sachem Head Capital Management has amassed a stake in Arconic Corp ARNC.N and has been pushing the U.S. aluminum sheet maker to go through with a process it has launched to sell itself, according to people familiar with the matter.
Arconic has been in talks with private equity firms, including Apollo Global Management Inc APO.N, about selling itself, the sources said, at a time when securing debt financing for leveraged buyouts has become challenging following this month’s jitters in the banking sector.
Apollo has so far indicated it is willing to pay $27 to $28 per share for Arconic, one of the sources said, close to where Arconic’s shares are trading currently. Sachem Head’s push for a sale would raise the pressure on Arconic to complete the negotiations successfully.
Bloomberg News on Thursday reported the buyout price Apollo was considering. Arconic shares have risen more than 20% since the Wall Street Journal reported on Feb. 28 that the Pittsburgh, Pennsylvania-based company was working with investment banks on a sale process. Arconic now has a market value of $2.6 billion and had debt as of the end of December of $1.6 billion.
The Reuters sources requested anonymity because the matter is confidential. Arconic did not respond to a request for comment, while Sachem Head and Apollo declined to comment.
The hedge fund, run by Scott Ferguson, established its position in Arconic, which has not been previously reported, in the last weeks, the sources said. The position’s size could not be determined.
Ferguson has told Arconic’s management that he would like the company to sell itself and would be supportive of a sales process, the sources said.
Arconic also tried to negotiate a deal in 2019 with Apollo, without success. In 2020, it split into two companies: Howmet Aerospace Inc HWM.N, a provider of jet engine components and aerospace fastening systems, and Arconic, which makes aluminum sheet, plate and extrusions for the aerospace and construction industries.
Sachem Head has launched corporate battles at several companies, including at US Foods Holding Corp USFD.N, where it reached a settlement for board seats last year, and the company’s CEO left after pressure from the hedge fund.
(Reporting by Svea Herbst-Bayliss and Chibuike Oguh in New York; Editing by Bill Berkrot)
((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters Messaging: svea.herbst.thomsonreuters.com@reuters.net))
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