Alcoa to Acquire TITAL to Expand Global Growth Platform for Titanium Aerospace Components

December 15, 2014

Transaction Enhances Product Suite in High-Growth Jet Engine Segment

  • Acquisition grows Alcoa’s portfolio of titanium structural cast parts for world’s bestselling jet engines and airframe structures
  • Expands product suite to meet growing demand; TITAL’s titanium revenues are expected to increase by 70 percent over the next five years
  • Adds expertise in engineering and manufacturing advanced, single-piece titanium and aluminum components that reduce jet engine weight and complexity
  • Establishes titanium casting capabilities in Europe, close to key customers; also expands aluminum casting capacity
  • Continues Alcoa’s expansion into advanced jet engine components

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

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
, 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,
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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.

Forward-Looking Statements

This release contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“anticipates,” “expects,” “forecasts,” “intends,” “plans,” “projects,”
“sees,” “should,” “targets,” “will,” or other words of similar meaning.
All statements that reflect Alcoa’s expectations, assumptions or
projections about the future other than statements of historical fact
are forward-looking statements, including, without limitation,
statements regarding the proposed acquisition by Alcoa of TITAL, the
expected impact of the proposed acquisition on Alcoa’s financial results
and its global position to capture demand for advanced jet engine
components made of titanium, TITAL’s expected increase in revenues from
titanium, the expected expansion of Alcoa’s global aerospace business,
forecasts concerning demand growth in the commercial aerospace sector,
the expected size, scope and growth of the combined company’s
operations, anticipated enhancements to Alcoa’s customer relationships
in Europe as a result of the acquisition, and the expected timing,
closing and other benefits of the transaction. These statements reflect
beliefs and assumptions that are based on Alcoa’s perception of
historical trends, current conditions and expected future developments,
as well as other factors management believes are appropriate in the
circumstances. Forward-looking statements are subject to a number of
known and unknown risks, uncertainties, and other factors and are not
guarantees of future performance. Important factors that could cause
actual results to differ materially from those expressed or implied in
the forward-looking statements include: (a) deterioration in global
economic and financial market conditions generally; (b) unfavorable
changes in the markets served by Alcoa, including aerospace; (c)
increases in the costs of raw materials; (d) political, economic, and
regulatory risks in the countries in which Alcoa and TITAL operate or
sell products; (e) the risk that TITAL will not be integrated
successfully or such integration may be more difficult, time-consuming
or costly than expected; (f) the possibility that certain assumptions
with respect to TITAL could prove to be inaccurate; (g) failure to
receive, delays in the receipt of, or unacceptable or burdensome
conditions imposed in connection with, required regulatory approvals and
the satisfaction of the closing conditions to the proposed acquisition;
(h) the loss of key employees, customers, suppliers and other business
relationships of Alcoa or TITAL as a result of the acquisition; and (i)
the other risk factors summarized in Alcoa’s Form 10-K for the year
ended December 31, 2013, Forms 10-Q for the quarters ended March 31,
2014, June 30, 2014 and September 30, 2014, and other reports filed with
the Securities and Exchange Commission. Alcoa disclaims any obligation
to update publicly any forward-looking statements, whether in response
to new information, future events or otherwise, except as required by
applicable law.

Kelly Pasterick, +1-212-836-2674
Christa Bowers, +1-347-244-9669
Alcoa Europe
Charles O’Brien, +44 (0) 20 7251 3801