NEW YORK--(BUSINESS WIRE)--Fitch Ratings expects the acquisition of RTI International Metals, Inc. (RTI) by Alcoa Inc. (IDR 'BB+'/Outlook Stable), announced today, to be credit neutral. The stock-for-stock transaction, valued at $1.5 billion including the assumption of roughly $517 million in convertible notes, builds on Alcoa's aerospace business and expands the company further into high performance metals. The two companies' businesses are complementary with little product overlap.
RTI is a leading producer and global supplier of titanium mill products, and a manufacturer of fabricated titanium and specialty metal components. Principal end-markets are commercial aerospace (63% of 2014 sales), defense (17% of 2014 sales), and energy, medical devices and other (20% of 2014 sales). The company had 2014 revenues of $793.6 million and operating EBITDA of $115.2 million.
The acquisition is subject to regulatory approvals and conditions and is expected to close in the second half of 2015. Leverage post-transaction is not expected to be materially different from Alcoa pre-transaction. Alcoa's total debt to operating EBITDA was 2.5 times at Dec. 31, 2014.
Fitch currently rates Alcoa as follows:
--Issuer Default Rating (IDR) at 'BB+';
--Senior unsecured debt at 'BB+';
--$3.75 billion revolving credit facility at 'BB+';
--Preferred stock at 'BB-'.
--Short-term IDR at 'B';
--Commercial paper at 'B'.
The Rating Outlook is Stable.
Additional information is available at 'www.fitchratings.com'.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.