Alcoa, seeking to build out its aerospace division, agreed on Thursday to buy Firth Rixson, a maker of jet engine parts, for at least $2.85 billion in cash and stock.
“The acquisition of Firth Rixson is a major milestone in Alcoa’s transformation,” said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. “This transaction will bring together some of the greatest innovators in jet engine component technology; it will significantly expand our market leadership and growth potential. Firth Rixson increases the earnings power and broadens the market reach of our high-value aerospace portfolio and will deliver compelling and sustainable value for customers and shareholders.”
Under the terms of the deal, Alcoa will pay $2.35 billion in cash and $500 million in stock to Firth Rixson’s owner, the investment firm Oak Hill Capital Partners. It could pay up to an additional $150 million if Firth Rixson hits certain performance targets.
On the LME, the primary aluminum cash price rose 0.4 percent to $1,866 per metric ton. After a 0.3 percent increase, the aluminum 3-month price finished the day on the LME at $1,902 per metric ton. The day’s biggest mover was the cash price of primary Indian aluminum which dropped by 0.7 percent on Thursday, June 26 to close at INR 114.00 ($1.90) per kilogram.
Chinese aluminum prices closed flat for the day. For the fifth day in a row, the price of Chinese aluminum scrap remained essentially flat at CNY 12,250 ($1,965) per metric ton. The price of Chinese aluminum billet remained essentially flat at CNY 13,590 ($2,180) per metric ton. The price of Chinese aluminum bar was unchanged at CNY 14,200 ($2,278) per metric ton. The Chinese aluminum cash price steadied at CNY 13,300 ($2,133) per metric ton following two-days of dropping prices.