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Alcoa to Separate into Two Companies

Lightweight metals manufacturer and recycler Alcoa has adopted a plan to separate into two publicly traded companies.

The Upstream Company will comprise five strong business units that make up Alcoa’s Global Primary Products: Bauxite, Alumina, Aluminum, Casting and Energy. The Value-Add Company will include Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions.

Alcoa expects the transaction to be completed in the second half of 2016.

After the separation, the Upstream Company will operate under the Alcoa name. The Value-Add Company will be named prior to closing.

Upon completion of the transaction, Alcoa CEO Klaus Kleinfeld will lead the Value-Add Company as chairman and CEO. He will also serve as chairman of the Upstream Company for the initial phase. Each company will have its own independent board of directors that will include members of the current Alcoa Board. Full management teams and boards for both companies will be named in the months leading up to the launch of the two companies in the second half of 2016.

After the separation, the Upstream Company, focusing on bauxite mining, alumina refining and aluminum production, will include 64 facilities worldwide, and about 17,000 employees. Revenues for the 12 months through June 30 totaled $13.2 billion, with $2.8 billion in EBITDA.

The company expects global aluminum demand to grow 6.5 percent in 2015 and double between 2010 and 2020; so far this decade, global demand growth is tracking ahead of this projection.

The Value-Add Company will provide high-performance multi-material products and services with 157 globally diverse operating locations and about 43,000 employees. Pro-forma revenues for the Value-Add Company for the 12 months through June 30 totaled $14.5 billion, with $2.2 billion in pro-forma EBITDA.

Earlier this month Ford and Alcoa announced a lightweighting project to produce next-generation automotive aluminum alloys that are more formable and design-friendly.

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