Acquisition & Q1 Earnings: Why Arconic Shares Are Shooting Higher Today

Arconic Corp ARNC has agreed to be acquired by funds managed by affiliates of Apollo Global Management, Inc. APO for $5.2 billion and also reported its first-quarter FY23 results.

Arconic shareholders will receive $30.00 per share in cash, a premium of ~36% to its undisturbed closing stock price on February 27, 2023.

"This transaction will provide Arconic with the backing of one of the world's premier investment firms and will allow us to leverage Apollo's industry expertise and relationships to pursue our long-term strategic goals," commented Tim Myers, Chief Executive Officer. 

Related: Private Equity Apollo Global Nears Arconic $3B Deal: Report

ARNC reported a Q1 sales decline of 12% year-over-year to $1.93 billion, beating the consensus of $1.85 billion.

The sales were up 6% organically due to strength in aerospace, packaging, and ground transportation sales, partially offset by weak industrial sales.

EPS was $0.24, missing the consensus of $0.30. Operating income fell by 26% Y/Y to $71 million, and the margin narrowed by 70 bps to 3.7%.

It recorded an adjusted EBITDA decline of 23.4% Y/Y to $157 million; the margin was 8.1%, down by 122 bps.

The company's long-term debt stood at $1.59 billion as of March 3, 2023.

ARNC's cash used for operations was $39 million, and capital expenditures were $82 million. It held cash and cash equivalents of $197 million as of March 31, 2023.

Price Action: ARNC shares are trading higher by 27.55% at $28.78, and APO shares are lower by 5.01% at $58.35 on the last check Thursday.