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Arconic to Split Forming and Rolling Operations

Feb. 19, 2019
Aluminum and titanium casting and forging will be a core element of new standalone business

Just over two years since its establishment, Arconic Inc. will split into two separate businesses, Engineered Products & Forgings and Global Rolled Products. The first of these units includes the investment casting and hot-isostatic pressing operations long known as Alcoa Howmet.  

Acronic has not defined the process or set a schedule for separating the two divisions. Some operations or product lines that do not fit the reorganization program may be sold off separately, according to the company.

The break-up decision by company directors, along with a cost-cutting initiative, both announced together with Arconic’s 2018 results, follows a tense period during which the group considered and then rejected an attempt by investors to privatize the aluminum and titanium products business.

Arconic was formed in 2016 in a similar break-up of Alcoa Inc.: that group’s mining, refining, and primary aluminum production remained in one portfolio (the current Alcoa), and the rolled products, engineered products, transportation, and construction product lines formed the new business. Via its forging, ring rolling, casting, additive manufacturing, and other manufacturing capabilities, Arconic is a significant supplier of lightweight components for aerospace, automotive, commercial transportation, and defense markets.

In January, Arconic directors voted down a $10.7-billion deal offered by Apollo Global Management that would have represented the largest industrial privatization in recent history. Like other large engineering and industrial businesses, the organization has been under investor pressure to maximize shareholders’ returns.

Newly appointed Arconic chairman and CEO John Plant said: “After a rigorous and comprehensive process, we did not receive a proposal for a full-company transaction that we believe was in the best interests of our shareholders. The board sees more shareholder-value creation through a restructuring of the company.

“As part of the strategy and portfolio review, we have determined to separate the portfolio into Engineered Products & Forgings and Global Rolled Products,” Plant continued. “In addition, we will also explore the potential sale of businesses that do not best fit into Engineered Products & Forgings and Global Rolled Products.”