Alcoa to buy titanium supplier RTI to boost aerospace business
By Nick Carey
CHICAGO (Reuters) - Alcoa Inc agreed to pay $1.3 billion to acquire titanium supplier RTI International Metals Inc, the metals company's latest investment in more profitable products for the aerospace and automotive industries.
Alcoa is offering the equivalent of $41 per share - a 50 percent premium over RTI's closing price on Friday in an all-stock transaction.
RTI's stock rallied nearly 40 percent, but Alcoa's shares fell 7.5 percent to a nine-month low on concern it overpaid, analysts said.
New York-based Alcoa, best-known as an aluminum producer, said around 80 percent of RTI's business is in aerospace and defense. The acquisition is its latest move to diversify into value-added products.
"This builds out our value-added business in a very attractive market - aerospace," Alcoa Chief Executive Klaus Kleinfeld said in an interview, adding that titanium is the fastest-growing metal used in aerospace production.
Last week Alcoa completed the acquisition of Tital, a German manufacturer of titanium and aluminum structural castings for aircraft.
"Basically, we've become a titan in titanium," Kleinfeld said.
Pittsburgh-based RTI, whose customers include Boeing Co, reported revenue of $794 million in 2014, and said it expected revenue of $850 million in 2015. Alcoa expects RTI's sales to reach $1.2 billion by 2019. Continued...