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Arconic, which manufactures flammable lining panels in connection with the deadly fire of the Grenfell Tower in the UK, announced that a multi-billion dollar sale of the company had collapsed after not having found a buyer willing to take over the group.
The company had extensive negotiations with a number of private equity firms, including Apollo and Blackstone. Apollo had gone so far as to secure financing from some of the biggest Wall Street banks to finance the deal. A takeover was to add more than $ 15 billion to the group, including debt, making it one of the largest debt buybacks since the financial crisis.
Apollo had offered the company $ 22.20 per share under an agreement including debt financing, according to two people informed of the negotiations. But the council rejected this offer, seeking a higher price.
Shares of the company fell more than 16% in the early afternoon in New York, to 17.05 dollars.
Seventy-two people died and 200 households were displaced by the London Tower fire in 2017, which engulfed the building after being propagated via the siding. Arconic provided flammable lining panels, which were installed outside the tower as part of a renovation in 2016.
At almost every stage of the sales process, Arconic faced challenges. Banks initially hesitated to pledge to finance the multibillion-dollar financing package, after the unwanted credit markets froze at the end of 2006. Potential buyers were also confused by the contingent liabilities badociated with Grenfell Tower. resulted in a reduction of bids from private equity bidders.
Two prominent British parliamentarians, one of whom represented the constituency of Kensington where the torch is located, told the Financial Times in December that they would oppose the agreement if it did not protect the interests of the victims of the fire.
Lawyers believe that it is unlikely that substantial damages will be paid in the UK, but believe that the stakes could increase significantly if the victims managed to persuade a US court to declare itself competent.
In the United States, clbad actions have so far been filed against the company by injured investors rather than by victims of the fire.
Arconic explained to the British investigation on the fire that the use of its panels "in combination" with other materials, their "configuration" and "other features of fire safety (or their absence) "had" created the conditions of the disaster ". The investigation is ongoing and no wrongdoing has been found against Arconic. However, the management of potential liabilities has become a major obstacle in the negotiations on an aborted agreement.
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According to several people aware of the discussions, Elliott Management, the hedge fund activist, has developed a structure that would have seen the fund or its insurers absorb the first tranche of all losses, thus protecting other shareholders from financial risks.
"Together with management, we conducted a rigorous and comprehensive review of the strategy and portfolio over the past year. As part of this process, we considered the sale of the company. However, we have not received a transaction proposal for the entire company that we believe would best serve the interests of Arconic shareholders and other stakeholders, "said Arconic Chairman John Plant. .
Arconic said on Tuesday that he would continue to look for a buyer for his construction products business, which is the unit that provided the exterior cladding applied to the Grenfell tower. The division represents approximately 15% of its sales.
The Wall Street Journal announced last week that the company was about to sell the company to Apollo, the private equity group founded by billionaire Leon Black, as part of a deal that would have earned it a market value of $ 22 each.
Apollo and Arconic did not immediately respond to requests for comment.
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