Alcoa will split into two independent companies, separating its bauxite, aluminum and casting operations from its engineering, transportation and global rolled products businesses.
The metals maker has been dealing with a downturn in its smelting business because of lower aluminum prices. The split will create one company focusing on upstream products, including aluminum. The other company will focus on engineered products, which includes the automotive and aerospace segments.
The aluminum and upstream products company will retain the Alcoa name. The name of the engineered products company has yet to be determines.
Alcoa Inc., which is based in New York with significant operations in Pittsburgh, expects the split to be complete by the second half of 2016.
"In the last few years, we have successfully transformed Alcoa to create two strong value engines that are now ready to pursue their own distinctive strategic directions," Chairman and CEO Klaus Kleinfeld said in a statement.
The company has been shifting its focus to its more profitable automotive and aerospace products, which also involve titanium. It has been shutting down unprofitable aluminum smelters as a surplus of the material on the market weighs down prices and profit.
Earlier this month, Alcoa broadened a partnership with Ford Motor Co. through the use of a stronger form of aluminum for auto body parts. It also spent about $60 million to expand its three-dimensional manufacturing capabilities at a technical center in the Pittsburgh area.
After the planned split, Kleinfeld will lead the as yet unnamed company focusing on engineering products. Each company will have its own board of directors and full management teams will be named in the months leading up to the split.
After initially rising, its shares slipped back and were unchanged at $9.69 in in premarket trading about two hours ahead of the market open.