Alcoa to acquire titanium supplier RTI for $1.5 billion

The news sent RTI stock up more than 28 percent in pre-market trading.

New York-based ALCOA (AA.NY)said around 80 percent of RTI's business is in aerospace and defense contracts.

Pittsburgh-based RTI, whose customers include Boeing Co reported annual revenue of $794 million in 2014, and said it expected revenue of $850 million in 2015. Alcoa said it expected RTI's sales to reach $1.2 billion by 2019, an increase of 50 percent versus RTI's 2004 revenue.

Last week Alcoa announced it would review 14 percent of its smelting capacity, or 500,000 tonnes, for closure, curtailment or sale, as it shifts its focus from its more traditional yet costly businesses to fabrication of value-added products aimed mainly at fast-growing demand from the automotive industry.

Alcoa has curtailed 1.3 million metric tonnes of smelting capacity since 2007, even as it has opened a large, low-cost smelter in Saudi Arabia.

Last week Alcoa also completed the acquisition of Tital, a German manufacturer of titanium and aluminum structural castings for aircraft engines and airframes. In November, the company completed the acquisition of Firth Rixson, a manufacturer of aerospace jet engine components.

In pre-market trading, RTI shares were up nearly $8 or more than 28 percent at $35. Alcoa shares were up 0.9 percent at $14.62.

(Reporting By Nick Carey; Editing by Alden Bentley and W Simon)

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