Updated from 9:22 a.m. EST

Aluminum manufacturer

Alcoa

(AA) - Get Report

said Tuesday that it would acquire

Cordant Technologies

(CDD)

for $2.9 billion in cash.

Alcoa, based in Pittsburgh, is paying $57 a share, a 93% premium over Cordant's Monday closing price of 29 9/16. Cordant rocketed 25 9/16, or 87%, to close at 55 1/8 Tuesday. Alcoa, however, dropped 6 13/16, or 10%, to close at 61 1/4.

Cordant, based in Salt Lake City, is a global leader in solid rocket-propulsion systems and the sole maker of solid rocket boosters for

NASA's

space shuttle program.

Alcoa fell on a combination of factors. "There was an overreaction on the adverse side. At first blush, a 93% premium raises eyebrows," said Thomas McNamara, an analyst of

CIBC World Markets

. But he characterizes the deal as adding to earnings and being strategically positive.

He rates Alcoa a buy and his firm has done no underwriting for the company.

Also, some investors are worried that Alcoa is making this acquisition, he said, because the company fears its acquisition of

Reynolds Metals

(RLM) - Get Report

, announced in August, may not go through. "It looks like Alcoa is running scared," McNamara said, adding that he does not share this concern.

The deal, which is subject to regulatory approval and other customary conditions, also includes the assumption of $685 million in debt.