Arconic Inc. revealed in a Securities Exchange Commission filing an agreement to sell its U.K. forging business to Aero Forgings Bidco Ltd., a business apparently formed to execute the sale. Further details of the buyer and its plans for the U.K. operations are not available.
The transaction is valued at $62 million and Arconic intends to finalize the transaction by Q4 2019. Also, Arconic anticipates a pre-tax charge of $40 million-$50 million for restructuring related expenses during Q3 2019.
Arconic’s current U.K. operations include 17 plants and a headquarters office. The forging operations include a plant in Exeter, another in Matlock, and two in Sheffield. These operations are part of the Arconic Engines business unit, which produces aerospace engine and industrial gas turbine components, including airfoils, rings, disks, and other forgings. Manufacturing processes include vacuum melting for superalloys, machining, coating, and hot-isostatic pressing.
The Pittsburgh-based aluminum and titanium producer is planning to split into two separate businesses during the second quarter of 2020, yielding a) Arconic, comprised of the current organization’s Global Rolled Products portfolio; and b) Howmet Aerospace, consisting of the current Engineered Products and Solutions operations that produce investment-cast engine components and engineered structures, fastening systems, and forged aluminum wheels.
The separate sale of the U.K. forging operations had not been signaled during the various announcements detailing the upcoming separation.
Arconic has said it plans to reduce its operating costs by about $230 million as it prepares for the separation.
Under pressure from shareholders to improve earnings, and having rejected a privatization proposal from Apollo Global Management, Arconic directors decided in February to split the business and to implement a cost-cutting initiative.
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.