Metals producer Allegheny Technologies (NYSE:ATI) sold its tungsten assets to components maker Kennametal (NYSE:KMT) on Monday for $605 million as it looks to focus on its core high-performance metals business.
Kennametal said the tungsten deal allows it to diversify its portfolio with “vital strategic assets,” helping to expand its presence in the aerospace and energy markets.
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Shares of ATI climbed close to 10% to $31.40, while those of Kennametal edged up about 2%.
A leading producer of tungsten metallurgical powders and tooling technologies, the tungsten business had roughly $340 million in annual sales last year. It is operated by roughly 1,175 employees across 14 facilities globally.
The acquisition has been approved by both companies’ boards of directors and is expected to close by the end of the year, subject to regulatory approval and other customary conditions.
“This sale strengthens our focus on ATI’s core strategic businesses and emphasizes the technical, commercial and operating synergies between our High Performance Metals and Flat-Rolled Products segment businesses," ATI CEO Rich Harshman said in a statement.
ATI, which said it hopes to gain greater financial flexibility from the sale, was advised by Goldman Sachs (NYSE:GS) and K&L Gates LLP.
Kennametal is paying for the transaction using cash on hand and debt.
JPMorgan Chase (NYSE:JPM) acted as exclusive financial advisor to Kennametal.