Alcoa has reached a definitive agreement to acquire German titanium and aluminum castings supplier Tital, the companies confirmed on Monday. Alcoa said the acquisition will strengthen its ability to capture increasing demand for titanium jet engine components.
The transaction, which has gained approval from the boards of directors of both companies, remains subject to customary closing conditions and regulatory approvals. Alcoa expects to obtain all required regulatory clearances and close the transaction in the first quarter of next year.
Alcoa projects a compounded annual commercial jet growth rate of 7 percent through 2019 and sees a current nine-year production backlog at 2013 delivery rates. Tital expects almost 70 percent of its revenues 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.
For Alcoa, the acquisition will establish titanium casting capabilities in Europe, while also expanding its aluminum casting capacity. The metals giant said it expects Tital’s strong connections with European engine and aircraft manufacturers such as Airbus, Snecma and Rolls-Royce to help cultivate customer relationships in the region and beyond.
“This acquisition is the next step in building a powerful aerospace growth engine,” said Alcoa chairman and CEO Klaus Kleinfeld. “As a fast-growing innovator, Tital will increase our share of highly differentiated content on the world’s best-selling jet engines.” Tital employs more than 650 people, primarily in Bestwig, Germany.
The Tital acquisition conforms with Alcoa’s plans to expand its aerospace business as part of what it calls a broader transformation. Last month Alcoa completed the acquisition of global jet engine component maker Firth Rixson. Earlier this year, Alcoa announced investments to expand jet engine parts production in Indiana and Virginia and opened the world’s largest aluminum-lithium facility in Indiana. It also plans to expand its coatings capabilities for jet engine components in Michigan and install aerospace plate manufacturing capacity in Iowa.
This year the company 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 the engine company’s PurePower turbofans.