Foundry Daily News

USA - Alcoa to Acquire RTI International Metals, Boosting Value-Add, Multi-Material Aerospace Portfolio

Expands Offerings Made of Titanium, Fastest Growing Aerospace Metal; Builds Advanced Manufacturing and Materials Technologies

  • Stock-for-stock transaction with enterprise value of $1.5 billion
  • Grows Alcoa’s advanced technologies for greater innovation power; Broadens multi-material product suite to meet growing aerospace demand for titanium
  • Increases Alcoa’s 2014 pro forma aerospace revenues by 13 percent to $5.6 billion
  • Expected to contribute $1.2 billion in revenues in 2019, up from $794 million generated in 2014; RTI’s profitability expected to reach 25 percent EBITDA margin in 2019, up from 14.5 percent in 2014
  • Strong annual global aerospace market growth of 5 to 6 percent; 9-year production order book for commercial jets

Lightweight, high-performance metals leader Alcoa (NYSE:AA) is announcing another major milestone in its transformation, further building its value-add portfolio for profitable growth. The Company has signed a definitive agreement to acquire RTI International Metals, Inc. (NYSE:RTI), a global supplier of titanium and specialty metal products and services for the commercial aerospace, defense, energy and medical device markets. Alcoa will purchase RTI in a stock-for-stock transaction with an enterprise value of $1.5 billion.

With RTI, Alcoa will grow its value-add businesses and further strengthen its aerospace portfolio. RTI will expand Alcoa’s range of titanium offerings and add advanced technologies and materials, increasing the Company’s position as a leading industrial innovator.

“Alcoa is accelerating its value-add growth engine by acquiring titanium leader RTI,” said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. “We are combining two innovators in materials science and process technology, shifting Alcoa’s transformation into a higher gear. RTI expands our aerospace portfolio market reach and positions us to capture future growth to deliver compelling value for customers, shareholders and employees.”

“Innovation and scale are critical to winning in both the titanium and aerospace industries today, which is why this transaction is such a natural strategic fit for both RTI and Alcoa,” said Dawne Hickton, Vice Chair, President and Chief Executive Officer of RTI International Metals. “We are pleased to have an agreement with Alcoa that delivers immediate value to our shareholders that appropriately reflects the strength of our business. Through this combination of forces, RTI will take its innovative technologies to the next level and deliver even more value-add titanium solutions to meet customer needs. We look forward to continuing to accelerate RTI’s success as a part of the Alcoa team.”

Under the terms of the agreement, Alcoa will acquire all outstanding shares of RTI in a stock-for-stock transaction. RTI shareholders will receive 2.8315 Alcoa shares for each RTI share, representing a value of $41 per RTI share based on Alcoa’s closing price on March 6, 2015. The transaction has an enterprise value of $1.5 billion, including $330 million of RTI cash on hand and up to $517 million in RTI’s convertible notes.

Transaction Benefits

The acquisition will offer Alcoa financial benefits with realized net synergies of about $100 million in 2019, primarily driven by procurement and productivity improvements, leveraging Alcoa’s global shared services and driving profitable growth. Alcoa expects RTI to contribute $1.2 billion in revenues in 2019, up from $794 million generated in 2014, with 65 percent of revenues supported by contracts over the next five years. RTI is expected to reach profitability of 25 percent EBITDA margin in 2019, up from 14.5 percent in 2014.

This transaction is expected to enable Alcoa to capitalize on strong growth in the commercial aerospace sector. Alcoa projects a compounded annual global aerospace market growth rate of 5 to 6 percent through 2019 and sees a current 9-year production order book for commercial jets at 2014 delivery rates.

RTI grows Alcoa’s pro forma 2014 annual aerospace revenues by 13 percent, up from $5 billion to $5.6 billion. RTI is expected to increase Alcoa’s 2014 pro forma aerospace revenues to 37 percent of value-add sales, up from 35 percent. Alcoa’s aerospace business is the largest contributor to Alcoa’s value-add businesses.

Eighty percent of RTI’s revenues in 2014 were from the aerospace and defense industries, with the balance mainly split between other markets including energy and medical devices, complementing Alcoa’s growth markets.

Strategic Rationale

RTI brings proven midstream and downstream capabilities in titanium, the world’s fastest-growing aerospace metal. Spending on titanium aerospace mill products is expected to grow by about five percent annually over the next five years driven by high-growth, next-generation aircraft programs. RTI’s titanium operations span midstream processes such as melting, ingot casting, bloom, billet, plate and sheet production; and downstream extrusions for aerospace, oil and gas applications, high speed machining, and production of integrated subassemblies primarily for aerospace. These capabilities complement Alcoa’s titanium investment casting and forging capabilities, and will enable a value-creating closed titanium scrap loop. RTI will increase the percentage of Alcoa’s non-aluminum downstream revenues to 64 percent of total downstream sales.

RTI will expand Alcoa’s advanced manufacturing and materials technologies. Its high-velocity machining, forming, extruding and parts assembly operations will enable Alcoa to produce some of the largest, most complex aerospace components. Advanced titanium powder metallurgy and processing technology will enable cost-effective production of near net shape aerospace components, as well as medical devices and oil and gas products. RTI will expand Alcoa’s additive manufacturing capabilities, such as 3-D printing, to produce titanium, specialty metals and plastic parts for aerospace, medical and energy applications. RTI also grows Alcoa’s portfolio of cutting-edge materials, including titanium-aluminides, complementing Alcoa’s industry leadership in metallics. Titanium-aluminides are increasingly used to manufacture lightweight, aerodynamic jet engine parts for high-volume, next-generation jetengines.


The transaction, which has been approved by the Boards of Directors of both companies, remains subject to customary conditions and receipt of regulatory approvals and RTI shareholder approval. Alcoa and RTI expect to obtain all required regulatory clearances and RTI shareholder approval in order to close the transaction in three to six months.

Greenhill & Co. and Morgan Stanley are acting as financial advisors to Alcoa, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel. Barclays is acting as the sole financial advisor to RTI, and Jones Day is serving as legal counsel.

Conference Call Information

Alcoa will host a conference call at 8:30 AM Eastern Daylight Time on March 9, 2015 to discuss the transaction. The meeting will be webcast via Call information and related details are available at under “Invest.” Presentation materials used during this meeting will be available for viewing at 7:15 AM EDT at A replay of the call will be available from 12:30 PM EDT on March 9 until March 23 at 11:59 PM EDT.

Additional resources: Go to for more information, photos and b-roll.

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 59,000 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, follow @Alcoa on Twitter and follow us on Facebook

About RTI International Metals

RTI International Metals, Inc. is a leading vertically integrated global supplier of advanced titanium and specialty metal products and services to commercial aerospace, defense, energy, medical device and other customers across the entire supply chain. For more than 60 years, RTI has been taking titanium further through advanced manufacturing and engineering processes. RTI delivers a full range of titanium mill products as well as other titanium and specialty metals products and services including extruded shapes, formed and 3D-printed parts, and precision engineered and machined components through our downstream integrated supply chain.


Youtube Linkedin Xing