Precision Castparts Buying Special Metals

Precision Castparts (PCP Quote) definitively agreed to acquire closely held Special Metals for $540 million in cash and debt assumption.

Shares in Portland, Ore.-based Precision Castparts surged 7% on news of its purchase of the maker of high-performance nickel-based alloys and super alloys.

"The acquisition of Special Metals clearly meets all of our criteria for profitable growth and will be instrumental in driving Precision Castparts to new levels of performance," said CEO Mark Donegan. "First and foremost, it will provide us with an internal supply of nickel-based billet for our Forged Products operations, enabling us to manage our overall value stream more cost effectively from raw material to forged component. Other than producing some billet at our WASA facility in Australia, we are currently buying all of our billet on the outside. As the leading user of premium-grade nickel in the world, we can see significant top- and bottom-line benefits through increasing SMC's volume, improving their yields, and decreasing the overall lead time to the marketplace. ...