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Precision Castparts Buying Special Metals for $540 Million

Aug. 27, 2005
Primary advantage will be in sourcing Ni-based billets for forging

Precision Castparts Corp. has agreed to buy Special Metals Corp. for approximately $540 million in cash, which figure includes resolution of Special Metals’ outstanding debts. SMC, Huntington, WV, is one of the top producers of of high-performance nickel-based alloys and super alloys.

PCP is a manufacturer of large, complex structural investment castings, airfoil castings, and forged components used in jet aircraft engines and industrial gas turbines.

Mark Donegan, chairman and CEO of PCP said the new subsidiary’s primary advantage will be providing the group with an internal supply of nickel-based billet for forging, "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."

Donegan also indicated SMC will be synergistic to the overall organization, like PCP’s earlier acquisitions, Wyman-Gordon and SPS Technologies, and predicted it will strengthen and diversify its marketing scope. "Along with holding well-established positions in aerospace and power generation, SMC manufactures a comprehensive small-diameter pipe product line, which will enable us to continue our successful penetration of the seamless, extruded pipe market. The ability to offer these products with Wyman-Gordon's large-diameter pipe will dramatically expand the breadth of our product line and create a much greater opportunity for us to bid on larger portions of projects. And, as with Wyman-Gordon and SPS, SMC opens up new opportunities for us in adjacent markets, such as the chemical, oil and gas, and pollution control industries, all of which present exciting growth potential."

Directors of both PCP and SMC have already approved the acquisition.