Alcoa revs up its aerospace business with Firth Rixson purchase by Laura Lorenzetti @FortuneMagazine June 26, 2014, 8:37 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Alcoa, the global aluminum and metals producer, is expanding its reach into aerospace with its $2.85 billion purchase of Firth Rixson, the company announced Thursday. Alcoa AA will pay $2.35 billion in cash, $500 million in common stock and an additional $150 million potential earn-out to acquire the jet engine component maker from private equity firm Oak Hill Capital Partners. “This transaction will bring together some of the greatest innovators in jet engine component technology,” Klaus Kleinfeld, chairman and CEO of Alcoa, said in a statement. “Firth Rixson increases the earnings power and broadens the market reach of our high-value aerospace portfolio.” The New York City-based metals producer serves a variety of customers across the automotive, aerospace, consumer electronics, packaging, defense, construction, and oil and gas industries. Aerospace is the largest value-add business for Alcoa. It brought in revenues of $4 billion last year, and Firth Rixson contributes an additional 20% in sales to bring 2013 totals to $4.8 billion. Looking forward, Sheffield, UK-based Firth Rixson is expected to contribute an additional $1.6 billion in revenue in 2016 and sales that are set to grow at a rate more than double the global aerospace market through 2019. Alcoa also expects to save more than $100 million annually by year five driven by productivity improvements, optimizing internal metal supply and leveraging Alcoa’s global shared services.