Last night, Alcoa’s (AA) board approved the company’s split into two pieces. RBC’s Fraser Phillips and team have the details:
Alcoa announced [yesterday] that the Board of Directors has approved the completion of the company’s separation into two independent, publicly traded companies. The separation is scheduled to become effective before market open on November 1, 2016.
As previously announced, the separation will occur by means of a pro rata distribution by Alcoa Inc. of 80.1% of the outstanding common stock of Alcoa Corporation. The other 19.9% of outstanding common stock will be retained by Arconic.
Stock split approval pending: Earlier this year Alcoa Inc. announced plans for a reverse stock split of Alcoa Inc. common stock at a ratio of 1 for 3 and a proportionate reduction in authorized shares of its common stock. A special shareholder meeting will take place on October 5, 2016 to seek approval of this reverse stock split and authorized share count reduction.
Distribution of shares: If the reverse stock split is approved, at the time of separation Alcoa Inc. shareholders will receive one share of the new Alcoa Corporation common stock for every three shares of the of the old Alcoa Inc. common stock held. If the reverse split is not approved, shareholders will receive one share of the new Alcoa Corporation for every nine shares of the old Alcoa Inc. common stock held. In addition all Alcoa Inc. shares held at the time of separation will become Arconic shares. Alcoa also noted that no fractional shares will be issued in the distribution, and shareholders of record will receive cash in lieu of fractional shares, paid on November 1, 2016. The record date for the distribution is October 20, 2016.
Shares of Alcoa have gained 0.7% to $10.03 at 11:33 a.m. today.
View more information: https://www.barrons.com/articles/alcoa-approves-split-heres-what-that-means-1475249926