PITTSBURGH (AP) -- Metals maker Allegheny Technologies Inc. plans to sell its tungsten materials business for $605 million to Kennametal Inc.
The Pittsburgh company said Monday that the deal gives it better financial flexibility as Allegheny Technologies, or ATI, focuses on growth opportunities in its high-performance metals and flat-rolled products segments.
ATI said the tungsten materials business generated about $338.6 million in revenue last year and $37.2 million in operating earnings. It employs about 1,175 people and makes tungsten powder, tungsten heavy alloys and carbide materials and carbide cutting tools.
Kennametal, based in Latrobe, Pa., said the deal will help it expand its presence in the aerospace and energy markets.
The acquisition will accelerate its previously announced plans to expand capacity and develop an advanced tungsten carbide recycling facility in the U.S. to serve global markets, Kennametal said. In addition, the company said it will be able to shave $30 million to $35 million from its planned capital spending as a result.
It expects the deal to be neutral to earnings for the rest of the current fiscal year, and sees future savings of $30 million to $40 million per year via productivity and operational improvements and raw-material cost benefits.
The boards of directors for both companies have approved the deal, which is expected to close in the fourth quarter.
Shares of ATI climbed 31 cents to $28.94 Monday before markets opened, while Kennametal's stock gained 42 cents to $46.42 in premarket trading.