LOS ANGELES Precision Castparts Corp. (PCC) isnt 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, PCCs top executive said.
"Are we at the end of ideas? No, were not by any stretch of the imagination," PCCs 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 didnt disclose how much it will pay for Synchronouswhose owner listed its annual sales at $130 millionthe 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 youve 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 didnt go into further detail on these "dynamics," and a PCC spokesman couldnt be reached for comment. But many say he was likely referring to the increasing likelihood following last months re-election of President Barack Obama that capital gains taxes will go up with the New Year.
Some industry sourcesnoting that the Nov. 9 announcement of the proposed Timet acquisition came just three days after the national electionsay 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 PCCwhose business model is known for strict reporting procedures and a relentless effort to attack costshas a team in place that could tackle still more acquisitions soon, although such acquisitions probably wouldnt be as large as Timet.
"If something comes up thats a must-have, I think were OK," he said. "Do I think well get another needle-mover in the next 22 days? No."
For example, he said, in PCCs 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, PCCs 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 PCCs $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 Timets 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).