The business, which makes approximately US$340 million in annual sales, is a leading producer of tungsten metallurgical powders, as well as tooling technologies and components. The business has approximately 1,175 employees across 14 operating facilities globally and consists of two market-leading divisions: ATI Firth Sterling and ATI Stellram. The transaction has been approved by both companies’ boards of directors and is expected to close before the end of the calendar year.
“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. “The addition of the expanded material and tooling technologies of ATI’s tungsten materials business will enable us to offer more to our customers around the world. We look forward to building on our respective strengths to accelerate growth while generating even greater value for our business and ultimately our shareholders.”
This acquisition is aligned with Kennametal’s growth strategy and the company expects to capitalise on the material technology capabilities, engineered components and tooling products of ATI’s tungsten materials business to expand its presence in the aerospace and energy markets.
The acquisition will advance Kennametal’s core strategy that seeks to diversify the company’s tungsten sourcing to balance supplies, costs and access to raw materials, including those produced from recycled products. The ability of ATI’s tungsten materials business to produce critical materials from recovered tooling and scrap will enhance Kennametal's material sourcing and development capabilities to support the company's growth initiatives. The acquisition accelerates Kennametal’s previously announced plans to expand capacity and develop an advanced tungsten carbide recycling facility in the United States to serve global markets. The company also estimates that this will reduce planned capital expenditures by approximately US$30 million to US$35 million and expects to achieve economy of scale six to eight years earlier than prior projections.
In addition, the acquisition will further 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.
The company forecasts potential annual run-rate cost synergies ranging from US$30 million to US$40 million, which it anticipates will be realised via productivity improvements, operational efficiencies and raw-material cost benefits. Kennametal also plans to pursue revenue synergies by extending the sales of ATI’s tungsten materials business globally through its existing sales channels, while building further on its strategic talent and technologies.