Apollo Global Management is nearing a deal to buy aluminum giant Arconic in a deal valued at roughly $22 a share, or $10.6 billion, The Post has learned.
The board of New York-based Arconic hasn’t yet approved the buyout, but has told Apollo — headed by billionaire Leon Black — and leading Arconic shareholder Elliott Management to finish necessary paperwork so it can clear the deal this weekend, sources said.
A buyout of Arconic, when including assumed debt, would be valued at more than $15 billion, making it one of the biggest leveraged buyouts since the 2008 financial crisis.
Financing for the deal is fully committed and is being led by Deutsche Bank, a source close to the talks said.
The debt markets have recovered from a winter freeze to the point where a large buyout of a company that makes aluminum parts for the aerospace industry can be done, sources said.
“There was an anxiety attack that receded,” an attorney close to the deal said, explaining that surprisingly strong job numbers this month and decent earnings reports have calmed the debt markets.
Another nagging issue in recent weeks has been the fact that a UK-based unit of Arconic sold construction panels that were blamed for the quick spread of a 2017 fire at Grenfell Tower in London that killed 72 people.
To get the deal done, Elliott Management, headed by activist investor Paul Singer, has agreed to take on the risks itself by acquiring majority control of the construction division that’s saddled with the Grenfell liabilities, sources said.
Nevertheless, insiders say Elliott also recently tangled with two other prospective bidders about the size of the guarantee it would provide.
Elliott was planning to put much less than the $1 billion-plus that a rival bidding team of the Blackstone Group and Carlyle Group felt would be needed to protect Arconic from potential litigation, a source close to the matter said.
Now, the deal will include more than $1 billion to cover potential liabilities, although that may include insurance, a source said.
Scotland Yard is investigating the deadly disaster at the 24-story residential tower in West London, and has found damaging information that might implicate Arconic, The Post reported exclusively in October.
If suits from the victims are filed and are successful, Arconic could be held responsible if damages are not covered by the new Elliott-acquired construction unit, sources said.
Already, the Scotland Yard investigation has hurt the auction and reduced the price Arconic is receiving even after spinning off the construction business.
“What fundamentally has changed the whole auction is the Grenfell Tower investigation,” a source close to the situation said.
Reps for Elliott and Apollo declined to comment. Arconic didn’t return calls.