Transaction Enhances Product Suite in
High-Growth Jet Engine Segment
- Acquisition grows Alcoa’s portfolio of
titanium structural cast parts for world’s bestselling jet engines
and airframe structures
- Expands product suite to meet growing
demand; TITAL’s titanium revenues are expected to increase by 70
percent over the next five years
- Adds expertise in engineering and
manufacturing advanced, single-piece titanium and aluminum
components that reduce jet engine weight and complexity
- Establishes titanium casting
capabilities in Europe, close to key customers; also expands
aluminum casting capacity
- Continues Alcoa’s expansion into
advanced jet engine components
Lightweight, high-performance metals leader Alcoa (NYSE:AA)
today announced plans to further expand its global aerospace
business through a definitive agreement to acquire privately held
TITAL. The acquisition will strengthen Alcoa’s global position to
capture increasing demand for advanced jet engine components made
of titanium.
Germany-based TITAL is a leader in titanium and aluminum
structural castings for aircraft engines and airframes. Its
revenues from titanium are expected to increase by 70 percent over
the next five years as manufacturers of next-generation jet engines
look to titanium solutions for engine structural components.
Titanium can withstand extreme high heat and pressure, and is a
lighter weight alternative to steel, providing increased energy
efficiency and improved performance. These engines are used on
large commercial aircraft, including wide- and narrow-body
airplanes. Engines for narrow-body aircraft are among the top
selling jet engines in the world.
“This acquisition is the next step in building a powerful
aerospace growth engine,” said Klaus Kleinfeld, Alcoa Chairman and
Chief Executive Officer. “As a fast-growing innovator, TITAL will
increase our share of highly differentiated content on the world’s
best-selling jet engines. The company’s talent and customer
relationships will boost Alcoa’s expanding global aerospace
leadership as we meet the future needs of our customers. We have
the highest respect for our future colleagues and look forward to
welcoming them wholeheartedly into the global Alcoa family.”
Philipp Schack, CEO of TITAL said, “Alcoa is widely recognized
for its innovation and manufacturing expertise, which is fully in
line with TITAL’s philosophy. We look forward to joining the Alcoa
family, and to combining our world-class technologies and
processes. Alcoa was and is our desired partner. We are glad to
join this impressive company at an exciting time.”
Transaction benefits
This transaction will further position Alcoa to capitalize on
strong growth in the commercial aerospace sector. Alcoa
projects a compounded annual commercial jet growth rate of 7
percent through 2019 and sees a current 9-year production order
book at 2013 delivery rates. Almost 70 percent of TITAL’s revenues
are expected to come from commercial aerospace sales in 2019. In
2013, the company generated revenues of approximately €71 million
(US$96 million), more than half of which came from titanium
products.
The acquisition will establish titanium casting capabilities in
Europe for Alcoa, while expanding its aluminum casting capacity.
TITAL’s strong connections to European engine and aircraft
manufacturers such as Airbus, SNECMA, and Rolls-Royce, will enhance
Alcoa’s customer relationships in the region, and beyond.
TITAL’s engineers are known and highly respected experts in
manufacturing advanced, single-piece components, often delivered
ready for the customer to install, which lower weight and reduce
complexity. These products, such as engine gearboxes, nacelles and
fan frames, are used on current and next-generation jet engines and
airframes. TITAL will add capabilities in casting titanium airframe
structures, such as titanium castings for pylons. Pylons mount
engines onto airframes and are a highly-engineered part because
they must bear the load of the engine and its thrust.
In addition, TITAL is a leader in process technology. It employs
advanced techniques needed to manage titanium’s reactive
properties, including cold hearth melting and centrifugal and
gravity casting. Its teams also use 3D-printed prototypes, enabling
customers to test designs and bring a finished product to market
faster.
TITAL employs more than 650 people, primarily in Bestwig,
Germany.
The transaction, which has been approved by the Boards of
Directors of both companies, remains subject to customary closing
conditions and receipt of required regulatory approvals. Alcoa
expects to obtain all required regulatory clearances and close the
transaction in the first quarter of 2015.
Financial details of the transaction were not disclosed.
Alcoa Aerospace
Alcoa has been aggressively growing its aerospace business as
part of the Company’s broader transformation. In November, Alcoa
completed the acquisition of global jet engine component leader
Firth Rixson, announced in June. This was the first of two
announced acquisitions in 2014, including the TITAL transaction.
Earlier this year, Alcoa announced investments to expand jet engine
parts production in Indiana and Virginia, opened the world’s
largest aluminum-lithium facility in Indiana, and in Michigan,
plans to expand its coatings capabilities for jet engine
components. In addition, the Company announced plans to install
advanced aerospace plate manufacturing capabilities in Iowa. It
also announced more than $2 billion in supply deals with Boeing and
Pratt & Whitney, which included the world’s first forging for
an aluminum fan blade for Pratt & Whitney’s PurePower® jet
engines. The PurePower engine will be used to power some of the
world’s highest volume aircraft, including the next-generation
Airbus A320neo.
Alcoa’s aerospace business holds the number one global position
in aluminum forgings and extrusions, jet engine airfoils and
fastening systems and is a leading supplier of structural castings
made of titanium, aluminum and nickel-based superalloys and
aluminum sheet and plate. It also holds the number one global
position in seamless rolled jet engine rings, engineered from
nickel-based superalloys and titanium, and is one of the world’s
leading suppliers of vacuum melted superalloys used to make
aerospace, industrial gas turbine, oil and gas products and
structural components for landing gear applications. It also has
entered into a highly specialized segment of jet engine forgings
that require isothermal forging technology.
About Alcoa
A global leader in lightweight metals technology, engineering
and manufacturing, Alcoa innovates multi-material solutions that
advance our world. Our technologies enhance transportation, from
automotive and commercial transport to air and space travel, and
improve industrial and consumer electronics products. We enable
smart buildings, sustainable food and beverage packaging,
high-performance defense vehicles across air, land and sea, deeper
oil and gas drilling and more efficient power generation. We
pioneered the aluminum industry over 125 years ago, and today, our
approximately 62,000 people in 30 countries deliver value-add
products made of titanium, nickel and aluminum, and produce
best-in-class bauxite, alumina and primary aluminum products. For
more information, visit www.alcoa.com, follow @Alcoa on Twitter at
www.twitter.com/Alcoa and follow us on Facebook at
www.facebook.com/Alcoa.
About TITAL
TITAL supplies industry leading companies around the world
primarily in the field of aerospace and defense systems with
sophisticated aluminum and titanium investment casting products
using the lost wax process. TITAL was founded in 1974 and in 2006
the management took over the company. Today the company employs
about 650 people with 2013 revenue of about €71 million or $96
million.
Forward-Looking Statements
This release contains statements that relate to future events
and expectations and as such constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include those containing such
words as “anticipates,” “expects,” “forecasts,” “intends,” “plans,”
“projects,” “sees,” “should,” “targets,” “will,” or other words of
similar meaning. All statements that reflect Alcoa’s expectations,
assumptions or projections about the future other than statements
of historical fact are forward-looking statements, including,
without limitation, statements regarding the proposed acquisition
by Alcoa of TITAL, the expected impact of the proposed acquisition
on Alcoa’s financial results and its global position to capture
demand for advanced jet engine components made of titanium, TITAL’s
expected increase in revenues from titanium, the expected expansion
of Alcoa’s global aerospace business, forecasts concerning demand
growth in the commercial aerospace sector, the expected size, scope
and growth of the combined company’s operations, anticipated
enhancements to Alcoa’s customer relationships in Europe as a
result of the acquisition, and the expected timing, closing and
other benefits of the transaction. These statements reflect beliefs
and assumptions that are based on Alcoa’s perception of historical
trends, current conditions and expected future developments, as
well as other factors management believes are appropriate in the
circumstances. Forward-looking statements are subject to a number
of known and unknown risks, uncertainties, and other factors and
are not guarantees of future performance. Important factors that
could cause actual results to differ materially from those
expressed or implied in the forward-looking statements include: (a)
deterioration in global economic and financial market conditions
generally; (b) unfavorable changes in the markets served by Alcoa,
including aerospace; (c) increases in the costs of raw materials;
(d) political, economic, and regulatory risks in the countries in
which Alcoa and TITAL operate or sell products; (e) the risk that
TITAL will not be integrated successfully or such integration may
be more difficult, time-consuming or costly than expected;
(f) the possibility that certain assumptions with respect to
TITAL could prove to be inaccurate; (g) failure to receive, delays
in the receipt of, or unacceptable or burdensome conditions imposed
in connection with, required regulatory approvals and the
satisfaction of the closing conditions to the proposed acquisition;
(h) the loss of key employees, customers, suppliers and other
business relationships of Alcoa or TITAL as a result of the
acquisition; and (i) the other risk factors summarized in Alcoa’s
Form 10-K for the year ended December 31, 2013, Forms 10-Q for the
quarters ended March 31, 2014, June 30, 2014 and September 30,
2014, and other reports filed with the Securities and Exchange
Commission. Alcoa disclaims any obligation to update publicly any
forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable
law.
AlcoaInvestor:Kelly Pasterick,
+1-212-836-2674Kelly.Pasterick@alcoa.comorMedia:Christa Bowers,
+1-347-244-9669Christa.Bowers@alcoa.comorAlcoa
EuropeFinsburyCharles O’Brien, +44 (0) 20 7251
3801Alcoa@Finsbury.com
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