The Biggest Corporate Buyback in America

Op-Ed: Here’s how companies can strong-arm their suppliers into cutting carbon emissions

In his 2014 State of the Union Address, President Obama called for a new era of American manufacturing. In his proposed federal budget, in 2015, the same president urged businesses of all sizes to embrace “the clean, American manufacturing that’s the backbone of the 21st century economy.”

So you don’t have to look far to see how Obama’s words are being carried out.

One of those companies, Advanced Energy Materials Corporation — in this case, at least, a private equity firm — announced on April 1 that it would buy Advanced Carbon Technologies, an aluminum producer in Michigan, for $17 billion. By purchasing AEMC, advanced energy companies could reduce greenhouse-gas emissions by 1.5 million metric tons (MMT) this year and 1.1 million to 1.3 million MMT in 2016. The firm expects to make over 500,000 MMT globally next year.

AEMC’s deal is the first large-scale corporate buyback I’ve heard of to date — and a major departure from earlier corporate clean-ups.

AEMC’s deal is also a reflection of a broader trend in corporate America. For the past four years, companies have been making huge sums of money from buying and selling firms like AEMC. For example, in 2015, the average annualized dividend yield on AEMC stock was more than $1.35 per share. In 2014, the largest firm in the U.S. on the Fortune 500 took in $16.4 billion in revenue from corporate buybacks.

Over the past two years, corporate buybacks have skyrocketed from $32 billion in 2013 to $45 billion in 2014, then $69 billion in 2015, a total of $110 billion over the past five years. It’s likely that the total value of all these deals will surpass $300 billion by

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