CEO Daily has been critical of the recent rash of corporate split-ups driven by activist investors looking for short-term returns. But Alcoa (aa) CEO Klaus Kleinfeld made a strong case yesterday that the coming split of 127-year-old Alcoa will actually increase long-term investment.
"It's essential for the long term," Kleinfeld told me at his Park Avenue offices, which will be divided in two when the split happens later this year. The company's core aluminum business is a commodity play, driven by cost, and has been battered by the recent collapse in demand from China and elsewhere. But its growing "value add" business, which provides products to the aerospace and auto industries, "is all about innovation," including, among other things, 3-D metals printing. It can only survive "if you have a different investor base" interested in investment and growth, not commodity cycles.
Kleinfeld will run the innovation business, which will take on a new name, and he is bullish about its future. He says the split was not driven by activists, although Paul Singer's Elliott Management has bought the stock since the split was announced.
But Kleinfeld shares the view of other CEOs that "the whole world is getting more short-term."
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