Alcoa to strengthen aerospace position with TITAL acquisition

NEW YORK & BESTWIG, Germany – Lightweight, high-performance metals leader Alcoa (NYSE:AA) announced plans to further expand its global aerospace business through a definitive agreement to acquire privately held TITAL, which specializes world primarily in the field of aerospace and defense systems with sophisticated aluminum and titanium investment casting products using the lost wax process.

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% over the next five years as manufacturers of next-generation jet engines look to titanium solutions for engine structural components. Almost 70% 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.

Titanium-based jet engine components are used on engines for both wide- and narrow-body commercial aircraft

This transaction will further position Alcoa to capitalize on strong growth in the commercial aerospace sector, and the acquisition is expected to strengthen Alcoa’s global position to capture increasing demand for advanced jet engine components made of titanium.

“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.”

Engineers at TITAL 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.

“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,” Mr. Kleinfeld added.

TITAL products, such as engine gearboxes, nacelles and fan frames, are used on current and next-generation jet engines and airframes. The Bestwig-based company will also 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.

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.”

Alcoa projects a compounded annual commercial jet growth rate of 7% through 2019 and sees a current 9-year production order book at 2013 delivery rates.

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.