Photo by: Reuters
TORONTO (miningweekly.com) – Aluminium and specialty alloy products producer Alcoa has signed a definitive agreement to acquire vertically integrated titanium and specialty metal products supplier RTI International Metals in a stock-for-stock transaction with an enterprise value of $1.5-billion.
On Monday, Alcoa explained that the deal would grow its advanced technologies for greater innovation power, while broadening its multimaterial product suite to meet growing aerospace demand for titanium.
“Alcoa is accelerating its value-add growth engine by acquiring titanium leader RTI. We are combining two innovators in materials science and process technology, shifting Alcoa’s transformation into a higher gear. RTI expands our aerospace portfolio market reach and positions us to capture future growth to deliver compelling value for customers, shareholders and employees,” Alcoa chairperson and CEO Klaus Kleinfeld said.
Under the terms of the agreement, Alcoa would buy all outstanding shares of RTI in an all-scrip transaction that would see RTI shareholders receive 2.8315 Alcoa shares for each RTI share, representing a value of $41 a RTI share based on Alcoa’s closing price on Friday. The transaction has an enterprise value of $1.5-billion, including $330-million of RTI cash on hand and up to $517-million in RTI’s convertible notes.
Alcoa had been transforming its business focus in recent years, increasingly depending on the higher-margin downstream market. The company on Friday announced that it would review up to 14% of its smelting capacity, or 500 000 t, for closure, curtailment or sale. The company had already curtailed 1.3-million tonnes of smelting capacity since 2007.
RTI’s NYSE-listed stock on Monday jumped nearly 40% to $38 apiece, while that of Alcoa trended lower at $13.70 a share.