Alcoa has agreed to buy aircraft parts maker Firth Rixson from US private equity firm Oak Hill Capital Partners.
The deal will grow Alcoa’s aerospace segment, and boost the US light metals giant’s production of nickel and titanium goods.
Stubbornly low aluminum prices have been weighing on Alcoa, and the company has been pushing to grow its more profitable downstream businesses, which sell products like truck wheels and aircraft fuselages instead of low-margin, less-processed metal.
The company said it has secured interim financing for the deal from Morgan Stanley, and will issue “a prudent combination” of debt and equity. It expects the takeover to boost its aerospace revenue by 20 per cent, to some $4.8bn a year, but sees no impact on earnings until the second year.
The deal value includes $2.35bn in cash, $500m of stock and an earn-out that could be worth $150m.
Peter Bland, chief financial officer, told The Yorkshire Post: “It’s a deal that works for both parties.”