Normally when an activist investor shows up on a shareholder register it comes with a set of ultimatums. Not with Alcoa Inc., where the arrival of Paul Singer’s Elliott Management Corp. was seen as an endorsement.
Alcoa was the best performer among major metal and mining shares on Monday as Elliott disclosed a 6.4 percent shareholding, saying Chief Executive Officer Klaus Kleinfeld’s plan to split the company in two would “create value substantially above the current share price.”
Elliott, which has sought changes at major companies including Hess Corp. and Samsung Group, built up the Alcoa stake on the assumption that the market was undervaluing its manufacturing business because of the metal price rout, according to people familiar with the transaction, who asked not to be identified discussing non-public information.
“It’s obviously a vote of confidence from a firm that is steeped in strategic actions,” Josh Sullivan, an analyst at Sterne Agee CRT, said by telephone.
Alcoa plans to separate its metal-making business from manufacturing and is stepping up efforts to close higher-cost smelting and refining capacity as a global glut batters the price of the metal.
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