Arconic stock (NYSE:ARNC) was on the up and up on Monday as the company is being targeted for a buyout by a large private-equity consortium.
The Pittsburgh, Penn.-based industrial company may be the next big company of its kind to be acquired as a consortium that includes Blackstone, Carlyle Group, Onex Corp. and Canada Pension Plan Investment Board have pooled their resources with the goal of acquiring the aluminum products maker, according to multiple sources close to the matter who chose to remain anonymous for now.
Arconic stock is moving upwards over the potential of this private-equity alliance, or “club deal,” joining forces in order to reduce the risk associated with one buyout firm taking all the risk that such an acquisition by itself would bring with it.
Private-equity dealmaking has increased in popularity in recent years as debt has been cheaper than ever and fundraising has reached record levels. This is one example of a bigger leveraged buyout in which private-equity firms join together to write bigger checks and prompt companies to consider teaming up once again.
The move has proven to be especially beneficial for Arconic, which has a market capitalization of $10.6 billion and total debt of $6.3 billion at the moment.
ARNC stock is up about 7.3% on Monday following the news.