ANALYSIS: Arconic and Elliott End Proxy Fight, Singer Gets Three Directors

May 25, 2017, 1:45 PM

The dramatic proxy contest between Arconic and Paul Singer’s Elliott Management Corp. ended in a negotiated settlement before the scheduled annual meeting. Under the terms of the agreement, Elliott nominated Christopher L. Ayers, Elmer L. Doty and Patrice E. Merrin, and Arconic nominated David P. Hess and holdover and former Elliott nominee Ulrich R. Schmidt for election as directors. Preliminary results from the meeting indicated that the shareholders elected these nominees.

The Arconic board stated that:

“We are pleased to have reached a constructive agreement with Elliott, our largest shareholder, and look forward to working collaboratively with Elliott to enable Arconic to realize the full potential of its great businesses. We are proud of what Arconic has accomplished to date. In the weeks and months ahead, we will recruit a new world-class CEO and select a new permanent Board Chair. We expect the new CEO to work with the Board to review Arconic’s strategy and its operations with the goal of optimizing the Company’s strategic plan and associated performance targets.”

The board will add one of Elliott’s nominees to the CEO search committee, and, according to Arconic, Elliott will have the opportunity to “engage collaboratively” with the CEO search committee.

Dave Miller, Elliott’s senior portfolio manager, said that:

“The governance improvements and substantial infusion of new perspectives and talent into the Board announced today—with highly qualified directors being drawn from both the Elliott and Company cards—will successfully position Arconic to realize its immense potential. We look forward to working collaboratively with the CEO search committee and the Board to ensure that Arconic has the right leadership at this critical juncture of its evolution.”

The reconstituted board will continue to face challenges, as demand in the automotive market has been slowing and there is downward price pressure on parts makers in the aeronautics industry. Arconic stock was trading at approximately $27.20 a share on Thursday afternoon, May 25, giving back some slight early-week gains and hovering around the previous week’s close.

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