Alcoa buys titanium supplier in US$1.5B deal
Alcoa has been shifting from mining and smelting aluminum to becoming a more diversified maker of lightweight metal
NEW YORK—Alcoa is taking another step to bolster its stake in the aerospace industry with a $1.5 billion, all-stock deal deal to buy titanium supplier RTI International Metals.
Aerospace and defence industries accounted for 80 per cent of Pittsburgh-based RTI’s revenues last year.
Alcoa has been shifting from its traditional role of mining and smelting aluminum to becoming a more diversified maker of lightweight metal and alloy products for aerospace, autos and other industries. It has benefited from demand for aluminum and other lightweight materials used to make planes more fuel-efficient.
Last week, Alcoa said it completed its acquisition of the German titanium and aluminum structural castings company Tital. That company’s titanium castings are used in aircraft engines and frames. It also completed in the fourth quarter the purchase of Firth Rixson, which makes alloy parts for jet engines.
For its latest deal, Alcoa plans to trade slightly more than 2.8 Alcoa shares for each RTI share. That equals a value of $41 per RTI share and represents a 50 per cent premium to RTI’s March 6 closing price of $27.28.
The $1.5 billion deal value includes $330 million in RTI cash and up to $517 million in the company’s convertible notes.
Alcoa also said that it will review 14 per cent of its global smelting capacity and 16 per cent of its refining capacity for possible curtailment or divestiture. The company has curtailed, closed or sold 31 per cent of its smelting capacity since 2007.