Specialty metals maker
Allegheny Technologies Inc.
) has entered into an agreement to sell its tungsten materials
business to Latrobe, PA-based wear-resistant products company
) for $605 million.
Both companies' Board of Directors has approved the
transaction. The deal is subject to necessary regulatory
approvals and is expected to complete by the fourth quarter of
2013. Until the completion of the transaction, Allegheny will
report the financial results of tungsten materials business under
its discontinued operations.
Allegheny decided to divest its tungsten materials business so
that it can focus more on its core businesses - High Performance
Metals and Flat-Rolled Products.. The acquisition is also
expected to increase Allegheny's financial flexibility and
simplify its capital allocation and deployment.
Allegheny's tungsten materials business operates through
roughly 1,175 employees across 14 operating facilities globally
and consists of two market-leading divisions - ATI Firth Sterling
and ATI Stellram. It produces tungsten powder, tungsten heavy
alloys, tungsten carbide materials and carbide cutting tools. The
business unit generated $338.6 million of total net revenues and
$37.2 million of operating profit for the year ended Dec 31,
Kennametal will pay for the acquisition partly by cash and
partly by available borrowings under its existing revolving
Allegheny's sole financial advisor and legal counselor for
this transaction are
The Goldman Sachs Group, Inc.
) and K&L Gates LLP, respectively. J.P. Morgan Securities
LLC, which operates as a subsidiary of
JPMorgan Chase & Co.
), acted as the financial advisor to Kennametal on the
Shares of Allegheny moved up roughly 8% to close at $30.95 on
Allegheny currently holds a Zacks Rank #4 (Sell).
ALLEGHENY TECH (ATI): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
KENNAMETAL INC (KMT): Free Stock Analysis
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