8-KMaterial AgreementsSecurities & ListingRegulation FD+1

Howmet Aerospace Inc. 8-K Report, Material Agreement (Jun 27, 2014)

Filed June 27, 2014For Securities:HWM

Summary

Alcoa Inc. (now Howmet Aerospace) announced on June 27, 2014, its entry into a material definitive agreement to acquire the Firth Rixson business for an aggregate consideration of approximately $2.85 billion. This acquisition is structured as a combination of $2.35 billion in cash and $500 million in Alcoa common stock. The deal also includes an earn-out provision of up to $150 million tied to the performance of Firth Rixson's Savannah facility, subject to customary adjustments for working capital, cash, and debt. To finance the cash portion of the acquisition, Alcoa secured a commitment for a $2.5 billion, 364-day senior unsecured bridge term loan facility from Morgan Stanley Senior Funding, Inc. The company anticipates completing the transaction by the end of 2014, subject to regulatory approvals and other closing conditions. This strategic move signals Alcoa's intent to bolster its position in the aerospace sector.

Key Highlights

  • 1Alcoa Inc. (now Howmet Aerospace) is acquiring the Firth Rixson business.
  • 2The total transaction value is approximately $2.85 billion, comprising $2.35 billion in cash and $500 million in Alcoa common stock.
  • 3An earn-out of up to $150 million is contingent on the future financial performance of Firth Rixson's Savannah, Georgia facility.
  • 4Alcoa has secured a $2.5 billion bridge loan commitment from Morgan Stanley Senior Funding, Inc. to finance the cash component of the acquisition.
  • 5The transaction is expected to close by the end of 2014, pending regulatory approvals and customary closing conditions.
  • 6The seller is subject to a 120-day lock-up period for the shares received, with subsequent registration rights.
  • 7The issuance of Alcoa common stock is expected to be exempt from registration under Section 4(a)(2) of the Securities Act of 1933.

Frequently Asked Questions

This 8-K filing announces Alcoa Inc.'s (now Howmet Aerospace) entry into a material definitive agreement to acquire the Firth Rixson business. It details the key terms of the acquisition, including the purchase price, financing arrangements, and the expected closing timeline.

The acquisition is being financed through a combination of approximately $2.35 billion in cash and $500 million in Alcoa common stock. To fund the cash portion, Alcoa has secured a commitment for a $2.5 billion bridge loan facility from Morgan Stanley Senior Funding, Inc.

Yes, Alcoa has entered into an Earnout Agreement that allows for payments of up to $150 million to the seller, contingent on the post-closing financial performance of Firth Rixson's Savannah, Georgia facility.

Alcoa currently anticipates that the acquisition will be completed by the end of 2014. However, this is subject to the receipt of certain regulatory approvals and the satisfaction of other customary closing conditions.