Kennametal to acquire Allegheny's tungsten materials business for $605 mn

US industrial material company Kennametal Inc yesterday said that it would acquire Allegheny Technologies Inc's tungsten materials business for $605 million in order to expand its presence in aerospace and energy end markets.

Allegheny's tungsten material business, ATI Tungsten Materials, makes tungsten powder, tungsten heavy alloys, tungsten carbide materials and carbide-cutting tools.

ATI Tungsten has 14 facilities globally, about 1,175 employees and generated $338.6 million in revenue in 2012.

Kennametal expects $30 million to $40 million in annual run-rate cost synergies from productivity improvements, operational efficiencies and raw-material cost benefits.

Kennametal, which manufactures metal-cutting tools, mining and highway construction equipment, plans to fund the acquisition through a combination of cash on hand and available borrowing under its revolving credit facility.

Pennsylvania–based Kennametal said that the acquisition will advance its core strategy of diversifying the company's tungsten sourcing to balance supplies, costs and access to raw materials, including those produced from recycled products. 

The acquisition will also augment Kennametal's tooling portfolio in the areas of metal cutting and metal finishing technologies, through brands such as Stellram Products, Garryson Products and Landis Products. 

''ATI's Tungsten Materials Business brings vital strategic assets that are an excellent complement to Kennametal, especially given our common focus on operational excellence and industry-leading material science,'' said Kennametal chairman, president and CEO, Carlos Cardoso.