Credit: AP Photo/Gene Puskar, File

Alcoa might be the worlds third largest aluminum producer, but in recent quartersthe company has been working to rebrand itself as a lightweight metals provider,bolstering its profitable aerospace business with multi-billion-dollar acquisitionsof businesses like jet-maker Firth Rixson and aerospace supplier Tital.In thelatest such acquisition, Alcoa has announced that it will buy RTI International Metals, a worldwide titanium supplier.

Alcoa announced Monday morning that it will acquire RTI in astock-for-stock deal worth $1.5 billion. Under the terms of the agreement, Alcoa will receive all of RTIs outstanding stock while RTI shareholders will receive a very precise2.8315 Alcoa shares for eachof their RTI shares. Based on Alcoas$14.48 per-share closing price on March 6, this gives RTI a value of $41 per share.

In explaining the deal, Alcoa said that acquiring RTI will strengthen its aerospace portfolio and expand its titanium offerings. RTIs parts-assembly operations should alsoallow Alcoa to produce larger and more complex aerospace components.

Alcoa is accelerating its value-add growth engine by acquiring titanium leader RTI, Alcoa CEOKlaus Kleinfeld said in a statement Monday morning. We are combining two innovators in materials science and process technology, shifting Alcoas 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.

The aluminum maker is projecting $100 million in synergies by 2019, with RTI contributing $1.2 billion in revenue by that time as well. Alcoa also said thatRTI grows its pro forma 2014 annual aerospace revenues by 13% to $5.6 billion.

For RTIs part, CEO Dawne Hickton said Monday that innovation and scale are critical to winning in both the titanium and aerospace industries today, which is why this transaction is such a natural strategic fit for both RTI and Alcoa. Hickton went on to add that she is pleased to have a deal that will deliver immediate value to RTIs shareholders.

Pending the necessary closing conditions and regulatory approvals, the deal is expected to close in the next three to six months.

Following the announcement of the $1.5 billion deal, shares of RTI surged while Alcoa sank: RTI is currently up 41%, while Alcoa is down 4.5%. Year-over-year, Alcoa is up 13.5% and RTI is up 46.3%.

Original post:

Alcoa Acquiring Titanium Supplier RTI In $1.5 Billion Deal