NEW YORK Allegheny Technologies Inc. (ATI) has agreed to sell its tungsten materials business to Kennametal Inc. for $605 million, the companies said Sept. 16. The deal is expected to close by year-end.
Pittsburgh-based ATI said the sale of ATI Tungsten Materials, part of its Engineered Materials segment, "strengthens (the companys) focus on ATIs core strategic businesses," namely its High Performance Metals and Flat-Rolled Products segments.
"ATIs growth opportunities are in our High Performance Metals segment businesses, including precision forgings and titanium investment castings, and in our diversified Flat-Rolled Products businesses," ATI chairman, president and chief executive officer Richard J. Harshman said in a statement, adding that the sale would provide ATI with "increased financial flexibility" and "simplifies capital allocation and deployment."
ATI Tungsten Materials, which employees 1,175 people across 14 facilities worldwide, generated $338.6 million in revenue and an operating profit of $37.2 million in 2012. The division produces tungsten powders, tungsten heavy alloys, tungsten carbide materials and carbide cutting tools.
While the tungsten market "was a very good business" for ATI, the sale was motivated by the companys desire to focus on growing industries served by its High Performance Metals and Flat-Rolled Products segments, vice president of investor relations and corporate communications Dan Greenfield told AMM.
"The largest end market for the High Performance Metals segment is aerospace, and backlogs in aerospace are at record levels," he said. "Weve spent an unprecedented level of capital on developing our capabilities in that segment."
Greenfield also cited ATIs investment in a $1.2-billion hot-rolling and processing facility currently under construction in Brackenridge, Pa., as evidence of its focus on flat-rolled capabilities (amm.com, Jan. 24).
Kennametal, a Latrobe, Pa.-based supplier of industrial tools and materials, said the deal will diversify its tungsten sourcing, including access to raw materials and recycled products. The acquisition will also accelerate "plans to expand capacity and develop an advanced tungsten carbide recycling facility in the U.S.," according to the company.