Alcoa is delving deeper into the aerospace industry, spending nearly $3 billion to acquire the British jet engine component company Firth Rixson.
The Pittsburgh company said Thursday that the deal will boost annual aerospace revenue by 20 percent, to about $4.8 billion, as the company continues to turn its focus away from its mining and aluminum smelting roots.
Company shares jumped 5 percent about an hour before markets opened, which puts the stock on course to reach a multi-year high.
Alcoa will pay $2.35 billion in cash and $500 million in stock to Firth Rixson's current owner, the private equity firm Oak Hill Capital. It also may spend an additional $150 million based on pre-set performance targets.
Firth Rixson makes rings, forgings and other metal products for the aerospace companies and other industries. It has operations in the United States, Asia and Europe.
The high cost of producing aluminum and falling prices for the metal have pushed Alcoa Inc. toward more finished products that are used in aircraft, autos and other goods.
In April, the company reported quarterly losses of $178 million. Aluminum prices haven't recovered since the recession and Acoa has been idling smelters to reduce capacity and cut costs.
At the same time, Alcoa is shifting sideways toward components.
The company last month revealed that it would spend $100 million to build factory in Indiana to make nickel-based engine parts for commercial airliners. With fuel prices rising, demand for more fuel-efficient planes has soared. Alcoa has said it expects the aerospace industry to grow by 8 percent to 9 percent this year.
Automakers, too, want to lighten up.
Around 30 percent of new vehicles are now rolling off the production line with aluminum hoods. Ford has unveiled an aluminum-body 2015 F-150 pickup that has all the power of the original, but weighs up to 700 pounds less. The truck goes on sale later this year.
The boards of directors for both companies have approved the Firth Rixson deal, which is expected to close by the end of this year.
Shares of Alcoa rose 75 cents to $15.30 in premarket trading. If those prices hold, company shares could hit a four-year high.