In a move to boost its capabilities to make specialty materials parts and components, Allegheny Technologies ( ATI) has bought precision machining company – Hanard Machine, Inc. – for an undisclosed price.
Salem, OR-based Hanard performs precision machining on parts and components that are produced from titanium alloys, nickel-based alloys and superalloys, aluminum, specialty steel and other ferrous and non-ferrous metals. Its key markets are aerospace and defense, and oil and gas/chemical process industry.
Following the takeover, Hanard will be a part of Allegheny’s titanium investment casting business based in Albany, OR, and will operate as ATI Cast Products, Salem Operations.
The buyout strengthens Allegheny’s aerospace supply chain role and better places it to attain its target to at least double the revenues of ATI Cast Products within the next 5 years.
With this takeover, the company is now integrated in the manufacture of titanium investment castings from titanium sponge to precision machined finished parts. Allegheny sees significant growth potential for its integrated titanium investment castings business.
Allegheny’s shares were up as much as 3.4% in the trading session last Friday. The stock eventually closed at $41.58 on that day, gaining 2.9%.
Allegheny, which is among the prominent players in the U.S. specialty steel industry along with Carpenter Technology ( CRS) and Precision Castparts ( PCP), is seeing healthy demand from aerospace OEMs, driven by production ramp ups. It should gain from its diversified global growth markets and differentiated product mix.
Allegheny expects business conditions to gradually improve through 2014. The company sees sustainable improvement and demand growth from most of its end markets. Allegheny expects continued increase in aerospace build rates.
Allegheny aims on maximizing value creation from investments in new products, strategic capital projects and strategic acquisitions over the next 3 to 5 years. The company is negotiating a number of new long-term agreements and extending its existing agreements with strategic customers that are expected to continue to enhance its competitive market position.
Allegheny currently retains a Zacks Rank #3 (Hold).
Another specialty steel company CITIC Pacific Ltd. ( CTPCY) holds a Zacks Rank #2 (Buy).