Amongst many other steps that Alcoa Inc (NYSE:AA) has been taking over the past few months to boost its Aerospace business, the purchase deal of RTI International Metals Inc is the best. As per the reports, it has agreed to pay $1.3 billion to acquire this prominent titanium supplier of the world.
What Prompted Alcoa To Acquire RTI:
Alcoa is looking forward to enhancing its reach in the Aerospace business. The latest investment of the company in RTI is one of the steps taken in the same direction. For all the RTI shareholders, it is a win-win deal as they have a lot to gain, but nothing to lose. As per the reports, all the shareholders of RTI will get $41 per shares, which is 50% more than the previous closing price of the company.
The Deal Is Over-Valued?
There were various speculations going on in the market, which doubted that the price paid to buy RTI by Alcoa was high. Analysts claimed that the deal price was more than the market expectations. As soon as this news hit the market, Alcoa’s shares fell by 7.5% while RTI’s shares surged by 40%.
Alcoa is looking forward to shifting its focus into value-added products. It is better known for aluminum production, but it wants to focus towards aerospace and defense products. There is no better company than RTI, which can help Alcoa fulfill its objectives. As per the reports, 80% of RTI’s business belongs to defense and aerospace field, which is something Alcoa, is looking forward to exploring.
Klaus Kleinfeld, CEO, Alcoa Inc (NYSE:AA) said that this deal would help the company in taking its business related to value-added services to all new level. Not only will it provide a solid platform, but also give a perfect direction to Alcoa in the near future.