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Alcoa Closes USD 1.5bn Acquisition of RTI International Metals.

M2 EQUITYBITES-July 23, 2015-Alcoa Closes USD 1.5bn Acquisition of RTI International Metals

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23 July 2015 - US-based aluminium company Alcoa (NYSE: AA) has closed its acquisition of US-based titanium and specialty metal products and services supplier RTI International Metals, Inc. (NYSE: RTI), the company said on Thursday.

RTI supplies the commercial aerospace, defense, energy and medical device markets.

Under the deal, which was struck in March, Alcoa purchased RTI in a stock-for-stock transaction with an enterprise value of USD 1.5bn.

With RTI, Alcoa said it will grow its value-add businesses and further strengthen its aerospace portfolio. RTI will expand Alcoa's range of titanium offerings and add advanced technologies and materials, increasing the company's position as a leading industrial innovator.

Under the terms of the merger agreement, each share of RTI common stock has been converted into the right to receive 2.8315 shares of Alcoa common stock, plus an amount of cash in lieu of fractional shares of Alcoa common stock.

With RTI, Alcoa expands its reach into titanium--the world's fastest-growing aerospace metal--and adds advanced technologies and materials capabilities for greater innovation power in aerospace and beyond.

Alcoa expects RTI to contribute USD 1.2bn in revenue in 2019, up from USD 794m that RTI generated in 2014, with 65 and of revenues supported by contracts over the next five years.

RTI's profitability is expected to reach 25 and EBITDA margin in 2019. Contracts that underpin RTI's growth include the recently announced contract with Airbus for finished titanium structural supply parts for the new A350-1000 aircraft program.

Under the agreement, Alcoa will supply titanium parts for the fuselage, among other components.

Greenhill and Co. and Morgan Stanley are acting as financial advisors to Alcoa, and Wachtell, Lipton, Rosen and Katz is serving as legal counsel. Barclays is acting as the sole financial advisor to RTI, and Jones Day is serving as legal counsel.

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Publication:M2 EquityBites (EQB)
Date:Jul 23, 2015
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