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.