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Alcoa Inc spun off Alcoa Corp, which houses the company's traditional aluminum smelting and refining businesses, in November and renamed itself as Arconic.
The stake sale comes at a time when Arconic's biggest shareholder, Elliott Management, is campaigning for the ouster of Chief Executive Klaus Kleinfeld.
Alcoa Corp's shares have surged about 68 percent since it was listed as an independent company on Nov. 1.
Arconic sold the shares in an overnight block trade, Thomson Reuters publication IFR reported on Tuesday, citing sources.
Morgan Stanley bought 23.35 million Alcoa shares before reoffering them to institutional investors at $38.25 each, a narrow 0.8 percent discount to the stock's Tuesday close, IFR reported.
Arconic said the proceeds from the sale would bolster its cash balance and help it pay down debt or pursue share buybacks.
Shares of Arconic have risen about 30 percent since Jan. 31, when Elliott started a proxy fight with the company after it posted a fourth-quarter loss.
Alcoa Corp's shares were down about 2 percent at $37.85 in morning trading. Arconic shares were little changed at $29.40.
Reporting by Ankit Ajmera in Bengaluru; Editing by Savio D'Souza and Anil D'Silva