LATROBE, Pa.—Tooling and materials technology firm Kennametal Inc. has agreed to acquire the Tungsten Materials Business of Allegheny Technologies Inc. for $605 million.
ATI’s Tungsten Materials Business, with approximately $340 million in annual sales, makes tungsten metallurgical powders, tooling technologies and components. It employs about 1,175 employees in 14 facilities globally and consists of two divisions: ATI Firth Sterling and ATI Stellram.
The transaction is expected to close before the end of 2013, subject to customary regulatory approvals and closing conditions.
Kennametal hopes to capitalize on the new business’s material technology capabilities, engineered components and stable of tooling products.
ATI’s Tungsten Materials Business is able to produce critical materials from recovered tooling and scrap, process that Kennametal covets.
Kennametal estimates that this will reduce planned capital expenditures by approximately $30 million to $35 million and expects to achieve economy of scale six to eight years earlier than prior projections.
The acquisition includes ATI’s Stellram Products, Garryson Products and Landis Products brands.
The company forecasts potential annual run-rate cost synergies ranging from $30 million to $40 million, which it anticipates will be realized via productivity improvements, operational efficiencies and raw-material cost benefits. Kennametal also plans to pursue revenue synergies by extending the sales of ATI’s Tungsten Materials Business globally.