October 30, 2018 / 8:42 PM / 17 days ago

Exclusive: Apollo in advanced talks to acquire Arconic - sources

(Reuters) - Private equity firm Apollo Global Management LLC (APO.N) is in advanced negotiations to acquire U.S. aluminum products maker Arconic Inc (ARNC.N) for more than $11 billion, people familiar with the matter said on Tuesday.

The deal would be one of the largest leveraged buyouts of the year. It would come after U.S. President Donald Trump’s imposition of aluminum tariffs this year drove up some costs for Arconic, which makes aluminum components for cars and airplanes.

Apollo could reach a deal with Arconic as early as next week after a competing buyout consortium comprising Blackstone Group LP (BX.N), Carlyle Group LP (CG.O), Onex Corp (ONEX.TO) and Canada Pension Plan Investment Board indicated it may need three more weeks to complete due diligence on the company, the sources said.

Apollo’s offer currently stands at around $23 per share, though negotiations are ongoing and the price could change or deal talks could end unsuccessfully, added the sources, who asked not to be identified because the matter is confidential.

Apollo, Arconic, Blackstone and Carlyle declined to comment, while Onex and Canada Pension Plan Investment Board did not immediately respond to requests for comment.

Shares of Arconic, which had net debt of $4.8 billion as of the end of September, rose 7 percent to $21.08 in after-hours trading in New York on Tuesday.

Arconic, which was spun out of Alcoa Corp (AA.N) in 2016, said in February it would carry out a “strategy and portfolio review.” It said earlier on Tuesday in its third-quarter earnings announcement that it was “extending the scope and duration of this activity to address additional scenarios,” and that it expected to complete its review in the fourth quarter.

Arconic reported a better-than-expected quarterly profit on Tuesday and raised its full-year earnings forecast, driven by higher demand for aluminum parts used by its airplane customers, including Boeing Co (BA.N) and Airbus SE (AIR.PA).

In August, Arconic announced it was considering selling its building and construction systems unit, which makes facades, windows and framing products. The announcement came one year after a major fire broke out at London’s Grenfell Tower apartment complex, where the company’s Reynobond PE panels were used in the cladding. More than 70 people were killed in the blaze.

Arconic said on Tuesday that the sale process for the building and construction systems unit was under way and had drawn “robust interest.”

Activist hedge fund Elliott Management Corp, which won board representation at Arconic last year following a proxy contest, has been instrumental in pushing the company to explore a sale, sources have said.

Reporting by Greg Roumeliotis and Harry Brumpton in New York; Additional reporting by Joshua Franklin in New York; Editing by Matthew Lewis

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