Arconic offered to settle its bitter proxy fight with Elliott Management by putting two of the four people the activist hedge fund has nominated on its board of directors.
The specialty metals parts maker has given Elliott, which controls about 13 percent of Arconic’s shares, until Wednesday to respond.
Monday’s offer came one week after Arconic announced the resignation of chairman and CEO Klaus Kleinfeld over an inappropriate letter he sent to Paul Singer, the manager of the $32 billion hedge fund.
Elliott launched the proxy battle in January, citing what it called the abysmal performance of Alcoa and Arconic during Mr. Kleinfeld’s tenure. The hedge fund said Mr. Kleinfeld should be replaced by former Spirit AeroSystems CEO Larry Lawson.
New York-based Arconic was created in November when Alcoa split its mining, refining and smelting businesses from downstream operations that make parts for the aerospace, automotive and other industries.
Arconic also released a copy of an email that its board sent to Mr. Singer on Monday in which it said Elliott had reneged on two previous settlement offers. The email referred to Elliott’s “ever-expanding litany of settlement terms.”
According to the email, Elliott is proposing the creation of a three-person operations committee to help David Hess, the former United Technologies Corp. executive who replaced Mr. Kleinfeld as interim CEO. Elliott wants to designate two of the committee’s members.
The proposal “reflects a fundamental gap between Elliott’s self-serving agenda and the commitment of the board of directors to good governance and proper board functioning to protect the interests of all shareholders,” the directors wrote Mr. Singer.
Arconic said it will postpone its shareholder meeting, previously scheduled for May 16, until an undetermined time later next month.
Gimme Credit, a corporate bond research firm, issued a report Monday saying no matter how many Elliott representatives end up on Arconic’s board, “We remain wary of the activists’ increasing influence.”
Research director Carol Levenson said Arconic ended up with nearly all the debt of the old Alcoa after the split and has no clear path to reducing that debt burden. Elliott’s growing clout at the company “merely adds to our concern,” she wrote in a note to clients.
Arconic shares closed Monday at $26.10, up 10 cents. They are up 41 percent this year.
Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.
Correction, posted April 25, 2017: The company’s name was incorrect in the headline.
First Published: April 24, 2017, 7:29 p.m.
