Aluminum giant Alcoa to split into two publicly traded entities
30 Jun 2016
Alcoa Inc, the world's third largest producer of aluminum, behind Rio Tinto Alcan and Rusal, yesterday said that it will split into two publicly-traded entities, admitting to the divergence of its legacy aluminium operations and higher-value and automotive businesses.
Alcoa Upstream Corporation will be renamed Alcoa Corporation prior to separation. Alcoa Corporation will hold the Upstream and North American packaging businesses and the Value-Add businesses will remain in the existing company, which will be named Arconic Inc.
Alcoa will spin off its aluminum smelting business, with up to 19.9 per cent of the new company owned by its business that serves aerospace and transportation industries.
The innovation and technology-driven value-add company will include global rolled products, engineered products and solutions, and transportation and construction solutions.
The separation is scheduled to be completed in the second half of 2016, the company said in a statement.
The separation is intended to qualify as a tax-free transaction to Alcoa shareholders for US federal income tax purposes.
Alcoa Corporation's businesses will include Bauxite, Alumina, Aluminum, Cast Products and Energy and rolling mill operations that will serve the North American packaging market.
Arconic will be a global leader in precision engineering and advanced manufacturing, providing a wide range of multi-material solutions to growth markets including aerospace structures, jet engines, automotive and commercial transportation.
Its businesses will include the Engineered Products and Solutions, Global Rolled Products, and Transportation and Construction Solutions segments.
New York-based Alcoa's traditional smelting business had been suffering due a surplus in the market that has caused a slump in prices and deepened the industry's worst crisis in years.
At the same time, the company had been bullish on growth from higher-margin titanium and high-strength aluminium sales to the aerospace industry, with a growing order book for airplane production and renewed global spending on automobiles.
Airplane manufacturers had turned to lightweight titanium from aluminum, and automakers to new, strong aluminum alloys instead of high-strength steel to improve performance and increase efficiency.
