Alcoa to split into two companies

NEW YORK (Oct. 2, 2015) — Aluminum specialist Alcoa Inc. is splitting into two independent, publicly traded companies, one devoted to materials and casting and the other to “value-added” products, including the firm's commercial wheel business.

The transaction is expected to be completed in the second half of 2016, Alcoa said. Both new companies will attract an investor base “best suited to their unique value proposition and operational and financial characteristics,” Alcoa said, and will be capitalized “prudently.”

Alcoa's wheel business is part of the company's Cleveland-based Alcoa Wheel & Transportation Products (AWTP) business unit, which serves the commercial vehicle, automotive and defense markets with a range of forged aluminum wheels and other aluminum components for these markets.

The company claims to be the the “global leader” in forged aluminum commercial vehicle wheels, specializing in light-weight wheel technology. Wheel sales were $786 million last year and $702 million in 2013, according to Alcoa financial statements. The firm anticipates estimated compound annual growth rate for wheels of 17 percent through 2018.

AWTP employs approximately 1,500 people at 14 locations worldwide and comprises three divisions: Commercial Vehicle Wheels, Forged Specialty Wheels and Transportation Products.

Upon completion of the transaction, Alcoa Chairman and CEO Klaus Kleinfeld will lead the Value-Add Co. as chairman and CEO and will be the acting chairman of the Upstream Co. for the initial phase, ensuring a smooth and effective transition, according to the company.

After the separation, the Value-Add Co. will comprise 157 globally diverse operating locations and approximately 43,000 employees generating pro-forma annual revenues of about $14.5 billion, with $2.2 billion in pro-forma EBITDA.

“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,” Mr. Kleinfeld said.