Kennametal Inc. (NYSE: KMT), Latrobe, PA, has agreed to acquire the Tungsten Materials Business of Allegheny Technologies Inc. (NYSE:ATI) for $605 million.
ATI's Tungsten Materials Business, with $340 million in annual sales, is a producer of tungsten metallurgical powders, tooling technologies and components. The business has 1,175 employees across 14 operating facilities globally and consists of two divisions: ATI Firth Sterling and ATI Stellram. The transaction is expected to close before the end of the calendar year.
Kennametal President and CEO Carlos Cardoso said the acquisition will enable Kennametal to offer more to its global customers. The company expects to capitalize on the material technology capabilities, engineered components and tooling products of ATI's Tungsten Materials Business to expand its presence in the aerospace and energy markets.
The acquisition will advance Kennametal's core strategy to diversify the company's tungsten sourcing to balance supplies, costs and access to raw materials, including those produced from recycled products. In addition, the acquisition will further augment Kennametal's tooling portfolio in the areas of metal cutting and metal finishing technologies, through brands such as Stellram Products, Garryson Products and Landis Products.
The company forecasts potential annual run-rate cost synergies ranging from $30 million to $40 million, which it anticipates will be realized via productivity improvements, operational efficiencies and raw-material cost benefits.
