Alcoa Inc (AA) Adds Directors To Stave-Off Board Fight With Elliott

Ahead of Alcoa’s split into two separate entities, the company announced the addition of three new directors (board members) to add manufacturing experience in order to avoid a board fight with activist Elliott Management Corp., which now holds 7.5% of the company.


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Elliott has worked with Alcoa behind the scenes rather than starting a public fight

Having acquired 7.5% of the United States’ largest aluminum producer, Elliott Management Corp. is choosing cooperation rather than a public fight with Alcoa ahead of the company’s split. The split, which was announced in September, will see Alcoa separating its metal products business from the commodity core of its business during a glut in aluminum prices. The split is expected to occur in the middle of this year.

The three directors the company will add bring a wealth of manufacturing experience to Alcoa in a move that Elliott has promised to back at Alcoa’s next board meeting. Ulrich Schmidt will join the board after years as the chief financial officer of Spirt Aerosystems; John C. Plant, also announced today was the former chief executive of TRW Automotive and Sean Mahoney has experience as the director of Delphi Automotive and Formula One Holdings following his early life as an investment banker.

With the addition of the three directors Alcoa will now have a 15 member board.

Both companies speak to the new directors

“Each of our new directors is a high-caliber executive with a proven track record of success, and each brings valuable skills highly relevant to the markets we serve, including aerospace and automotive,” Klaus Kleinfeld, Alcoa’s chairman and chief executive, said in a statement. “We look forward to drawing on their expertise as we launch two independent companies positioned for success.”

It’s quite clear that Elliott orchestrated the addition of the three and publicly gave its blessing today.

“This is a pivotal moment for Alcoa and represents an opportunity to create substantial value for shareholders,” said Dave Miller, a senior portfolio manager at Elliott Management.

While Elliott has famously started public spats with companies like Hess Corp. and Samsung Group, the activist fund has changed its tactics in its dealings with Alcoa that it believes is undervalued in its manufacturing division.