Major metal manufacturer, Alcoa, is set to pay $1.5bn in stock to acquire Pittsburgh-based titanium company RTI International Metals following an announcement last week.
Alcoa, which is best known for producing aluminium, is using the acquisition to help expand its reach into the aerospace market.
RTI International Metals is a titanium producer that caters to the military, aerospace, energy and medical markets.
Alcoa will pay 2.8315 of its shares for each RTI share, with the deal expected to have an enterprise value of about $1.5bn.
The company said that it expected to have cost savings of $100m in 2019 as a result of the deal, and for RTI to be generating $1.2bn revenue by that year.
Alcoa chief executive Klaus Kleinfeld said the acquisition of RTI International Metals gave Alcoa more exposure to the fast-growing aerospace market.
“Alcoa is accelerating its value-add growth engine by acquiring titanium leader RTI,” he said.
“We are combining two innovators in materials science and process technology, shifting Alcoa’s transformation into a higher gear.”
Alcoa officials said the acquisition would particularly bolster its business in the aerospace industry.
“Basically, we’ve become a titan in titanium, Mr Kleinfeld said.
RTI International Metals chief executive Dawne Hickton said the acquisition suited both parties.
“Innovation and scale are critical to winning in both the titanium and aerospace industries today, which is why this transaction is such a natural strategic fit for both RTI and Alcoa,” she said.
“We are pleased to have an agreement with Alcoa that delivers immediate value to our shareholders that appropriately reflects the strength of our business.”