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Another big PCC buy not likely soon: exec

Keywords: Tags  titanium, aerospace, Precision Castparts, Timet, Titanium Metals, Mark Donegan, Steven G. Hackett, Harold C. Simmons Synchronous Areospace Group


LOS ANGELES — Precision Castparts Corp. (PCC) isn’t at the end of its acquisition string, but another purchase on the scale of its pending blockbuster takeover of Titanium Metals Corp. (Timet) may not be in the cards anytime soon, PCC’s top executive said.

"Are we at the end of ideas? No, we’re not by any stretch of the imagination," PCC’s chairman and chief executive officer Mark Donegan said at the Credit Suisse 2012 Aerospace and Defense Conference in New York last week when asked about the possibility of additional acquisitions in the near future.

In what Donegan described as a "needle-mover" for PCC, the Portland, Ore.-based producer of castings, forgings, fasteners and aerostructure components said in November it would pay $2.9 billion for Timet. PCC followed the news last week with its intention to acquire Synchronous Aerospace Group, a Santa Ana, Calif.-based aerospace machining and manufacturing company (amm.com, Nov. 28).

While PCC didn’t disclose how much it will pay for Synchronous—whose owner listed its annual sales at $130 million—the price is thought to dwarf that of Dallas-based Timet, whose 2011 revenues were more than $1 billion.

Donegan cited some "interesting dynamics" in play until the end of the year that have influenced the current pro-acquisition environment. "There is a reason why you’ve seen so much" takeover activity in the last six months and may see more for the balance of 2012, he said at the conference.

Donegan didn’t go into further detail on these "dynamics," and a PCC spokesman couldn’t be reached for comment. But many say he was likely referring to the increasing likelihood following last month’s re-election of President Barack Obama that capital gains taxes will go up with the New Year.

Some industry sources—noting that the Nov. 9 announcement of the proposed Timet acquisition came just three days after the national election—say they believe this helped convince Harold C. Simmons, the billionaire investor who controls Timet, to go against his reputation for not divesting his holdings and instead sell the titanium producer. The sale is expected to be finalized by the end of the year.

Nevertheless, Donegan emphasized that PCC—whose business model is known for strict reporting procedures and a relentless effort to attack costs—has a team in place that could tackle still more acquisitions soon, although such acquisitions probably wouldn’t be as large as Timet.

"If something comes up that’s a must-have, I think we’re OK," he said. "Do I think we’ll get another needle-mover in the next 22 days? No."

For example, he said, in PCC’s traditional businesses such as castings and fasteners, the company "could take on more tomorrow morning and the management team can handle it."

Donegan said that Steven G. Hackett, PCC’s senior vice president of new business integration, has been the point man for integrating acquisitions into the parent company and will oversee the assimilation of Timet. He pointed out that Hackett played the same role after PCC’s $850-million acquisition of Carlton Forge Works, a Paramount, Calif.-based producer of aerospace forgings that it bought in 2009 and is believed to be among Timet’s customers (amm.com, Aug. 27, 2009), as well as SPS Technologies Inc., a Jenkintown, Pa.-based fastener manufacturer that PCC acquired in 2003 for about $730 million (amm.com, Aug. 19, 2003).


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