What happened
Shares of Arconic (ARNC +0.00%) rocketed this week and were trading up 16.9% for the week as of 9:40 a.m. ET Friday, according to data provided by S&P Global Market Intelligence.
The aluminum company, which primarily serves the aerospace and automotive industries, just announced its quarterly numbers, but that has nothing to do with the stock's meteoric rise. The reason behind Arconic's jump is much bigger, and it will affect every investor in the company.
So what
Arconic announced Thursday that it has agreed to be taken private by alternative asset manager Apollo Global Management. As is typically the case, the stock shot up close to the levels at which the deal was struck -- $30 a share. It's an all-cash deal, so every Arconic investor will receive $30 per share in cash when the deal closes, which is expected to be sometime later this year.
NYSE: ARNC
Key Data Points
Since the deal represented a significant premium to Arconic stock's Wednesday closing price of $22.55 per share, the stock shot up almost 29% by Thursday's closing. It clocked a day's high of $28.93 per share.
Investors in Arconic have seen a lot of volatility in recent years. Arconic was spun off from aluminum giant Alcoa in 2016. Arconic itself then split into two in 2020 and spun off its components and parts businesses into a newly publicly listed company, Howmet Aerospace.
Yet the volatility in commodity prices throttled Arconic's growth, and it struggled to make money. Just this week, Arconic reported a 12% year-over-year drop in sales and a 40% drop in net income for its first quarter. In 2022, Arconic reported a net loss of $182 million, although its revenue rose 19% to $9 billion.
Now what
To be sure, this deal shouldn't have come as a surprise. Arconic has been a potential takeover target for several years now, with Apollo emerging as the front-running suitor. In fact, The Wall Street Journal even reported that Apollo had submitted a buyout offer for Arconic in March of this year.
As it turns out, this time, it was more than just a rumor or speculation, and Arconic is indeed selling itself. Investors who bought Arconic shares in 2020 after it became a stand-alone company have made a lot of money, and this week's gains have only added to their returns.
