Alcoa Inc. said it would acquire Pittsburgh-based RTI International Metals Inc., one of the world’s biggest makers of fabricated titanium products for the aerospace and automotive industries, in a transaction with an enterprise value of $1.5 billion.
For New York-based Alcoa, the world’s biggest aluminum producer by value, the stock-for-stock deal is part of its strategy to focus more on manufactured products for the aerospace and automotive industries.
Alcoa wants to become less reliant on its old-fashioned smelting business, which is suffering from weak prices for raw aluminum. Alcoa on Friday said it would look at closing up to 14% of raw smelting capacity. Since 2007, it has taken almost a third of its smelting capacity out of production.
RTI shareholders will receive 2.8315 Alcoa shares for each RTI share, representing a value of $41 per RTI share based on Alcoa’s closing price on Friday. RTI shares, which closed Friday at $27.28, jumped 28% to $35 in premarket trading Monday.
The cash price of primary Indian aluminum saw a 0.3% drop on Friday, March 6, landing at INR 112.45 ($1.80) per kilogram and making it the biggest mover of the day. On the LME, the aluminum 3-month price rose 0.1% to $1,806 per metric ton. On the LME, the cash price of primary aluminum held steady around $1,787 per metric ton.
Chinese aluminum prices were mixed for the day. The cash price of Chinese aluminum saw a 0.2% decline to CNY 12,810 ($2,044) per metric ton. Chinese aluminum billet prices saw a 0.2% decline to CNY 12,820 ($2,046) per metric ton. Chinese aluminum bar finished the day down 0.1% to CNY 13,600 ($2,170) per metric ton. The price of Chinese aluminum scrap held steady at CNY 12,500 ($1,995) per metric ton.