Arconic (NYSE:ARNC) stock was on the rise Monday following talk about a possible buyout of the company.
A recent report claims that Arconic is a strong target for a buyout from several private equity firms. Among these firms that may have an interest in obtaining the producer of airplane parts is Apollo Global Management LLC.
According to these reports, Arconic is an attractive acquisition target for private equity firms due to its lacking cash generation and current valuation. This would allow these private equity firms to have easy enter and exit points in connection to buying and selling the company.
All of this talk about a private equity firm scooping up Arconic comes as it struggles to turn its business around. The company’s not been performing well lately and new CEO Chip Blankenship has been considering what to do with it. He plans to complete his review of the company this quarter, reports Bloomberg.
Credit Suisse analyst Curt Woodworth is among those that believe Arconic is an attractive target for a buyout. A recent note from the analysts claims that this is due to a few reasons. They include its strong presence in the market it serves, the current valuation of the company and the potential for a turnaround.
Woodworth believes that a possible buyout of Arconic would value the ARNC stock between $24 per share and $26 per share. This would represent a premium of roughly 38% to 49% from the closing price for ARNC stock on Friday.
ARNC stock was up 10% as of Monday morning.
As of this writing, William White did not hold a position in any of the aforementioned securities.