Private-equity firm Apollo Global Management LLC is nearing a deal to buy Arconic Inc. for more than $10 billion, ending months of negotiation over what would be one of the largest leveraged buyouts in recent years.
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Apollo would pay between $21 and $22 per share in a deal that’s likely to be announced this week, according to people familiar with the matter.
Arconic shares currently trade at just over $19, so the price would represent a premium of 10 percent or more over a stock that’s already been buoyed by hopes of a deal. The Wall Street Journal first reported in July that Apollo and others were interested in an acquisition of Arconic, an aerospace-parts maker that was Alcoa before the aluminum company was split up in 2016.
As usual in complicated merger negotiations, the timing could slip and there’s no guarantee there will be a deal.
Should one be finalized, it would end a monthslong sales process for Arconic, which had a market value of about $9.3 billion Tuesday morning. Before it emerged as the front-runner, Apollo competed in the auction with other buyout firms including a team of Blackstone Group LP and Carlyle Group LP.
In addition to providing relief to its shareholders, a deal for Arconic—to be funded with a huge helping of high-yield debt—would be another sign of a thaw in the credit markets. Just a few weeks ago, it looked like turmoil in global markets might threaten Apollo’s bid, but a recovery in recent days has aided the deal’s prospects.
Last week, midstream energy company Targa Resources Partners LP became the first issuer to sell junk bonds since November, ending a 40-day drought. That was the longest stretch without a high-yield bond sale since Dealogic started tracking the data in 1995.