Specialty metals giant Allegheny Technologies Inc. will buy forging and investment casting group Ladish Co. Inc. following a “definitive merger agreement.” The deal values Milwaukee-based Ladish at $778 million, with will be paid in a combination of cash and ATI common stock, pending acceptance by Ladish shareholders. The deal is expected to close in the first quarter of 2011.
Ladish president and CEO Gary J. Vroman said his company has been “preparing and positioning for market growth, but that the merger creates opportunities “that were previously a stretch for us.”
According to Vroman, “integrating Ladish's manufacturing operations with ATI's broad product range of specialty metals immediately enhances our ability to serve our existing customer base.
Allegheny Technologies is focused on high-value metals and alloys, including titanium and titanium alloys, nickel-based alloys and superalloys, grain-oriented electrical steel, stainless and specialty steels, zirconium, hafnium, and niobium, tungsten materials. Its products include flat and long rolled products, forgings, and castings. Its global operations employ approximately 8,900 full-time workers.
Ladish has about 1,700 employees at several operating divisions, including Ladish Forging in Cudahy, WI, and ZKM Forging in Stalowa Wola, Poland; Diecast Tooling in Racine, WI; Stowe Machining Inc. in Windsor, CT, Valley Machining in LaCrosse, WI; and Pacific Cast Technologies, an investment in Albany, OR.
The consolidation highlights the two groups’ involvement in supplying materials and components to aerospace and energy markets. ATI's chairman and CEO L. Patrick Hassey pointed to Ladish’s expertise with technologically advanced forging, investment casting, and machining, indicating the combination of the two organization will create “a more integrated, stable, and sustainable supply chain for the aerospace, defense, and industrial markets.
“We like the people, the technology, and the market position of Ladish,” Hassey explained. “Our strategy is to build unsurpassed manufacturing capabilities and develop innovative new products that add value for our customers. With this strategic acquisition, we leverage these capabilities to forward integrate and better position ATI to capitalize on secular growth trends in our key markets.
In October Ladish reported third-quarter 2010 sales of $100.3 million, a 31.6% year-on-year improvement. The company expects total 2010 sales to reach about $400 million, and Hassey anticipates that total will rise pending a recovery in the aerospace market. “In addition, we believe at least $100 million of sales can be added through market synergies,” he said.