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Sheffield aerospace manufacturer Firth Rixson acquired by US firm in $2.85 billion deal

Sheffield’s Firth Rixson has been acquired by US firm Alcoa in a $2.85 billion (£1.67 billion) deal from provate equite firm Oak Hill Capital Partners.

Firth Rixson was founded by Firth Brown and Woodhouse and Rixson, steel industry pioneers in the early 19th century.The firm has doubled the size of its facility in Sheffield in recent years and is investing £35 million in plant and machinery at the site.

It currently employs 2,400 across 12 facilities worldwide including four in Sheffield and two in Derbyshire at Darley Dale and Glossop employing 900 people in total.

Alcoa, formerly the Aluminium Company of America, is the third biggest aluminium producer in the world behind Rio Tinto Alcan and Rusal.

Low aluminum prices have been weighing on Alcoa and the company has been trying to grow its more profitable downstream businesses, which sell products like truck wheels and aircraft fuselages instead of low-margin, less-processed metal. Alcoa has also been cutting costs and closing high smelting capacity.

Peter Bland, chief financial officer said: “It’s excellent news for Firth Rixson and for Alcoa, we have had remarkable growth over the last 10 years.

“We needed a strategic partner for the next stage of growth. This investment will ensure the business will continue to grow for the next few years.

“Firth Rixson is healthy and profitable standalone business.”

Firth Rixson has already been backed by Carlyle, the US private equity firm, who took the firm private in 2003 in a £106 million deal. Carlyle sold its stake to Oak Hill in a £2 billion deal in 2007.

The company employs 550 people in Sheffield. It has six other sites across the UK.

The company said it has secured interim financing for the deal from Morgan Stanley, and will issue “a prudent combination” of equity content securities. It expects the takeover to boost its aerospace revenue by 20%, to some $4.8bn a year, but sees no impact on earnings until the second year.

Klaus Kleinfeld, chairman and chief executive of Alcoa, said: “The acquisition of Firth Rixson is a major milestone in Alcoa’s transformation.

“This transaction will bring together some of the greatest innovators in jet engine component technology; it will significantly expand our market leadership and growth potential.”

This was posted in Bdaily's Members' News section by Clare Burnett .