Precision Casparts to buy Titanium Metals
Precision Castparts Corp., a maker of metal forgings for jet engines, agreed to buy Titanium Metals Corp. for $2.9 billion, the companies announced Friday.
Precision, based in Portland, Ore., will pay $16.50 per share in cash for the Dallas-based titanium melted and milled products company, a 44 percent premium to the company's closing stock on Thursday.
“Timet will provide us with the titanium capability that has always been a key missing piece of our overall product portfolio,” Mark Donegan, CEO of Precision Castparts said in a statement.
Titanium Metal employs more than 500 at a production plant in Toronto, Ohio. Timet competes in the titanium market with Pittsburgh-based Allegheny Technologies Inc. and Moon-based RTI International Metals Inc., which operates a plant in Niles, Ohio.
The deal extends Precision's acquisition spree under Donegan, who has overseen more than two dozen purchases in the past decade. Planemakers Boeing Co. and Airbus SAS have urged suppliers to consolidate to help support record increases in jet output.
Donegan said in a July interview that he foresaw at least $1 billion in merger opportunities in the next 16 months. Portland, Oregon-based Precision agreed last month to acquire pipe processor Texas Honing Inc., and said in July it was buying four factories from Canadian landing-gear maker Heroux-Devtek Inc. to expand in the aviation-parts industry.
Donegan said that the addition will also help the company as it tries to grow in the aerostructure market that Titanium Metals works with.
Timet, with production facilities in the United States and Europe, supplies nearly one-fifth of the world's titanium. The metal is in demand among commercial aerospace manufacturers for jet engine components and airframe structures because it reduces weight and increases fuel efficiency.
The news sent shares of Titanium Metals up more than 40 percent in after-hours trading. Precision's shares increased 5 percent.
Precision and Timet have worked together for a number of years. As a result, Donegan expects the integration of the business to move quickly once the transaction closes, which is expected by year-end.
Titanium Metals' primary stockholder, Valhi Inc., a unit of Contran Corp., has agreed to tender its shares. It holds more than half of the company's outstanding stock. The deal has been approved by the boards of both companies.
Precision expects the acquisition will add to its earnings immediately. It is financing the deal with a combination of cash on hand and debt.
Titanium Metals also said Friday that it earned $18.6 million, or 11 cents per share, in the third quarter. That is down from $25 million, or 14 cents per share, in the same quarter last year. Both quarters include a charge of 1 cent per share for deferred income tax.
Its revenue fell to $257.7 million from $262.5 million as lower demand for industrial-grade products were offset by higher prices.
Analysts polled by FactSet were expecting the company to earn 16 cents per share on revenue of $282.5 million.
Titanium Metals shares closed regular trading at $11.57 but jumped $4.95 to $16.52 after hours. That is beyond its 52-week trading range of $10.42 to $16.53. Precision's shares increased $4.92 to $176.25 in after-hours trading.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Home price gains slow for 6th-straight month
- Tech giants lead rush for profits in foreign countries
- Fed to keep cards close to the vest
- Jimmy Dean moves beyond breakfast
- Market in neutral, awaiting economic news
- China investigates Microsoft in monopoly case
- Consumer confidence jumps to 90.9 in July
- GNC revenue, sales drop, but vitamin retailer says plan in place
- Hotels, restaurants lead job additions in Pittsburgh region
- EPA hearings to bring coal debate to Pittsburgh streets
- Consol Energy posts $25 million loss despite gas gains