Alcoa to Split Into 2 Companies
Source: New York Times
Deal Book
By LESLIE PICKER
SEPT. 28, 2015
Alcoa, which produces both aluminum and parts that go into Ford pickup trucks, said on Monday that it planned to divide those two businesses.
The nearly 127-year-old company announced that it would separate 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. The transaction, which will be tax-free to Alcoa shareholders, is expected to close during the second half of 2016.
Over the last seven years, under Klaus Kleinfeld, the chief executive of Alcoa, the company has built its newer, higher-margin businesses through almost $5 billion worth of acquisitions and several divestitures. On the commodities side, Mr. 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. He closed high-cost facilities and altered the way Alcoa’s products were priced to improve profitability.
Read more: http://www.nytimes.com/2015/09/29/business/dealbook/alcoa-to-split-into-2-separate-companies.html
Full disclosure: I own shares of Alcoa.
Alcoa to split into two companies; shares surge
Related: Aerospace & Defense
CHICAGO | By Nick Carey
Alcoa Inc said on Monday it will split into two companies to separate its struggling aluminum smelting operations from production of lightweight metals for its faster-growing aerospace and automotive business.
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Falling commodity prices and a glut of aluminum have battered Alcoa stock, which before the news, had fallen more than 42 percent this year.
The split will separate the cyclical commodity business that excels during demand upswings from a high-technology business benefiting from rising demand for new alloys and titanium for planes and automobiles.
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In a conference call with analysts Alcoa said that as of Dec. 31 2014, its pension was underfunded by about $3.3 billion.
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(Reporting by Nick Carey; Additional reporting by Lewis Krauskopf; Writing by Bernadette Baum; Editing by Michele Gershberg, Ed Davies and W Simon)
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