Alcoa Confirms It Will Separate Itself: Here Is What You Need To Know
Alcoa (NYSE: AA) announced after Thursday’s market close that its Board of Directors approved the completion of a previously announced decision in which the company will split into two independent companies.
Alcoa has already communicated its intentions but Thursday’s announcement serves as final confirmation and a date of November 1, 2016 has now been set for the transaction to finalize.
Following the announcement, shares of Alcoa gained 0.60 percent to trade at $10.02.
Alcoa’s split will result in the creation of two companies. First, Arconic’s business will focus on the high-performance materials and engineered products to the aerospace, automotive and other growth industries. The second, Alcoa Corporation, will operate in the bauxite, alumina and aluminum space.
Kalus Kleinfeld, Alcoa’s current CEO will serve as Arconic’s Chairman and CEO. Roy Harvey, President of the Alcoa Global Primary Products business will be promoted to CEO.
The actual business split will occur through a pro rata distribution by Alcoa of 80.1 percent of its outstanding stock of Alcoa Corporation. Arconic will retain 19.9 percent of Alcoa’s common stock.
The announcement also provided an update to an earlier decision to undertake a reverse stock split of Alcoa Inc.’s common stock at a ratio of one for three. A meeting has been scheduled for October 5, 2016 in which investors will vote for or against the split.
If the proposal is approved, when the separation of Alcoa is conducted, shareholders will also receive one share of Alcoa Corporation for every three shares of Alcoa Inc. held. If the reverse stock measure is not approved, shareholders will receive one share of Alcoa Corporation for every nine shares of Alcoa Inc. they own.
Alcoa also cautioned investors:
“Beginning on or about October 18, 2016, and continuing up to and through the distribution date, two markets are expected for Alcoa Inc. common stock: the “regular-way” market and the “ex-distribution” market. Shares that trade in the “regular-way” market will be entitled to shares of Alcoa Corporation common stock distributed pursuant to the distribution; shares that trade in the “ex-distribution” market will trade under the symbol ARNC WI and without an entitlement to shares of Alcoa Corporation common stock distributed pursuant to the distribution.”