Arconic Opens Door to Elliott Deal With Offer of Two Board Seats
Arconic Willing to Nominate Two of Elliott's Director Nominees
(Bloomberg) -- Arconic Inc. broached a potential compromise in a bruising proxy battle with Elliott Management Corp., saying it would be willing to hand over two of the four board seats sought by billionaire Paul Singer’s New York hedge fund.
The Arconic board will “promptly appoint” two of Elliott’s candidates if they confirm they’re willing to be nominated by April 26, according to a statement Monday. The May 16 annual meeting will be delayed to later in the month to allow for ballot changes at the maker of aluminum parts for autos and aircraft.
The offer of two board seats “signaled a dramatically more conciliatory attitude” toward Elliott, Carol Levenson, an analyst at Gimme Credit, said in a note to clients.
Arconic is stepping up efforts to resolve a proxy fight that led to the departure last week of Chief Executive Officer Klaus Kleinfeld, who resigned after firing off a letter to Singer that was described by Elliott as threatening and by the board as showing “poor judgment.” In a sign that the battle may not be over, the company accused Elliott of reneging on two tentative settlement agreements in the past two weeks by adding additional terms.
Most recently, Arconic said, Elliott pushed for an operations committee that would be dominated by the fund’s candidates. The company said that would hurt its ability to hire the best CEO. Elliott, which has a 13.2 percent stake in Arconic, also sought three of the five members on a board committee to search for a new leader, the manufacturer said.
‘Undue Influence’
“We would prefer to settle the proxy contest on reasonable terms consistent with good governance,” the board wrote to Elliott, according to the statement. “We are not willing to agree to inappropriate conditions that give you undue influence and that are not in the best interests of all Arconic shareholders.”
Elliott declined to comment. The activist investor has backed Larry Lawson, the former CEO of Spirit AeroSystems Holdings Inc., for the top job. Arconic named board member David Hess as interim CEO after Kleinfeld’s exit.
Elliott since last year has had three of its hand-picked candidates on the 13-member Arconic board. Winning the proxy fight would give it a majority.
For Singer, Arconic’s acceptance marked his second potential victory of the day in Elliott’s activist efforts. Dutch paintmaker Akzo Nobel NV said earlier Monday it would review a sweetened $29 billion takeover offer from U.S.-based PPG Industries Inc., which has Elliott’s backing.
To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net.
To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson