NEW YORK & BESTWIG, Germany—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.
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