Elliott Management Acquires 6.4% Stake In Alcoa

(RTTNews) - Hedge fund Elliott Management Corp. has acquired a 6.4 percent stake in aluminum producer Alcoa Inc. (AA).

The hedge fund, founded by Paul Singer, disclosed the stake in a regulatory filing and said it acquired Alcoa's shares as these shares were "dramatically undervalued by the public market".

Elliott Management said it believe the spin-off transaction recently announced by Alcoa's management will create value substantially above the current share price.

The hedge fund added that it seeks to engage in a constructive dialogue with Alcoa's board of directors on the spin-off transaction and other additional available opportunities to maximize shareholder value.

In late September, Alcoa said its board of directors has approved a plan to separate it into two independent, publicly-traded companies - a higher-margin manufacturing operations, and a smelting and refining business. The transaction is expected to be completed in the second half of 2016.

Alcoa was among the companies that were hit most during the recession. The company cut more than 20,000 jobs and closed plants in the U.S. and Europe to tide over the global economic slowdown.

Like other aluminum producers, the company had been suffering from declining aluminum prices caused by a glut. Alumina reported a sharp decline in profit for the most recent third quarter as as sales dropped 11 percent, reflecting divestitures and currency headwinds. The results fell short of analysts' estimates.

AA closed Monday's trading at $9.07, up $0.38 or 4.37 percent on a volume of 44.22 million shares. In after-hours, the stock further gained $0.04 or 0.44 percent to $9.11.