Chris Hill: We have to start, though, with the stock of the day.
This is a reminder that you don't have to be going up to be the stock of the day.
Taylor Muckerman: [laughs] You do not. Most likely, you're not going up, in this market.
Hill: In this case, it's Arconic, which is the maker of aluminum parts that was spun out of Alcoa.
Shares of Arconic, now they're down about 16%.
Earlier, they were down about 25% because the board of directors said that the company
is no longer for sale. And it had been for sale.
And Apollo had ponied up somewhere north of $10 billion to buy them.
The fact that the board has pulled the plug on this has a bunch of investors saying, "No, we're out."
Muckerman: It's a pretty wild story. This company was, like you mentioned, spun out of Alcoa.
It was the darling of the deal when they split the aluminum producer and then the parts producer,
which is Arconic, out, because it has exposure to aerospace,
commercial transport, the oil and gas market. So investors were really excited about this company.
And then, in 2017, their cladding business provided aluminum parts for a building in
England that caught fire, and they didn't perform as well as they should have.
So, that's been an overhang for this business since 2017.
As early as August of last year, Reuters came out with a story saying that they're going to
put the cladding business up for sale, potentially the whole business.
And that's what ended up happening.
Even as late as earlier this month, this company was definitely for sale.
They were going to go for $22 for Apollo Global.
Now, this morning, the management team and the board came out and said that they don't
believe that they've received any offers that justify the value of this company for shareholders.
And so now, [laughs] shareholders are really feeling the pinch with shares down as much
as 25% or more in trading today. Hill: The stock is just under $17 a share.
By my calculations, this puts it at a 30-year low.
Muckerman: [laughs] Yeah. Hill: [laughs] So, I mean... I kind of am.
On the one hand, I think, "Wait a minute, someone's going to pay for this business."
I'm wondering if the 30-year low seems like a buying opportunity, or if anyone who's looking
at this should wait until, I don't know, some more information comes out of the board of directors.
I will say that it's pretty unsettling to see a reversal like this.
I'm not a shareholder, but anytime you have -- and maybe that's part of the reaction that
we're seeing with the stock today.
There wasn't really any indication that anything other than a sale was going to happen.
And for them to just completely pull the plug, and not even say, "We think it's worth
more than that," or, "We're saying no to this offer, but we're still open to negotiation," it's like, "No.
We're not for sale." That's really throwing people for a loop.
Muckerman: Yeah, it voices a lot of distrust from investors for management because they
had multiple offers. Up until they announced and said no, this was all going through.
I definitely think the sell-off maybe a little bit overdone.
Investors are maybe just like, "You know what?
We're out, because now we have no clue what management is thinking," and rightfully so.
If you have exposure to oil and gas market right now, not the best place to be.
Aerospace is still a booming business, but not necessarily growing gangbusters.
So it seemed like this might have been a great deal for the investors, and now they're just like,
who knows what's going to happen?
This won't be the last investors hear about Arconic and a potential sale moving forward.
So, if I was considering, I would definitely still pump the brakes a little bit before
jumping in and wait to see what else comes out of this before buying shares.