Alcoa (AA) Will Split into Two, Separate, Publicly-Traded Companies

28 Sep 2015 | Author: | No comments yet »

Alcoa Splitting Into 2 Companies.

NEW YORK — Alcoa will split into two independent companies, separating its bauxite, aluminum and casting operations from its engineering, transportation and global rolled products businesses. The nearly 127-year-old company announced that it wouldseparate its legacy commodity side, which is to inherit the Alcoa name, from its newer, bigger-ticket businesses, which serve markets such as aerospace and automotive. Over the last seven years, under Klaus Kleinfeld, the chief executive, Alcoa has built its newer, higher-margin businesses through almost $5 billion worth of acquisitions and several divestitures. Formerly a member of the Dow Jones Industrial Average, Alcoa continues to be one of the first major international companies to announce quarterly financial results each earnings season. “In the last few years, we have successfully transformed Alcoa to create two strong value engines that are now ready to pursue their own distinctive strategic directions,” CEO Klaus Kleinfeld said. “After steering the Company through the deep downturn of 2008, we immediately went to work reshaping the portfolio.” “We have repositioned the upstream business; we have an enviable bauxite position and are unrivalled in Alumina, we have optimized Aluminum, flexed our energy assets, and turned our casthouses into a commercial success story,” Kleinfeld continued. “The upstream business is now built to win throughout the cycle. Kleinfeld made moves to protect against the cyclical nature of aluminum prices, which can rise and fall on the basis of events such as a Chinese construction boom and bust.

We have intensified innovation, made successful acquisitions, shed businesses without product differentiation, invested in smart organic growth, expanded our multi-materials profile and brought key technologies to market; all while significantly increasing profitability.” The segment that is to become the newer unit, which has yet to be named, provides metal products for transportation, industrial gas turbines and construction industries. In the 12 months through June, Alcoa’s newer businesses generated $14.5 billion in revenue and $2.2 billion in earnings before interest, taxes, depreciation and amortization. Alcoa’s decision to separate is part of a long-term strategy, rather than an effort to appease an activist investor agitating to unlock value, people briefed on the matter said.

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