Alcoa Inc. (AA) the world’s leading producer of aluminum completed the acquisition of TransDigm Group Inc.’s (TDG) aerospace fastener business for $240 million. The transaction is expected to be accretive to the earnings and cash flow in the first year.
TansDigm’s aerospace fastener business will become a part of Alcoa Fastening Systems (AFS), a leading worldwide designer and manufacturer of specialty fastening systems, components and installation tools for aerospace and industrial applications.
The transaction is expected to create added value for Alcoa’s customers and shareholders. Besides, the company is anticipated to expand its international presence in the growing aerospace fastener market.
TransDigm, a global designer, producer and supplier of highly engineered aircraft components employs approximately 400 people and produces a wide variety of nickel alloy specialty engine fasteners, airframe bolts and slotted entry bearings.
A few days back, Alcoa acquired a minority stake in Electronic Recyclers International (ERI), the largest U.S. recycler of electronics waste. Neither of the two companies disclosed the extent of the stake acquired in ERI. The partnership is a part of Alcoa’s efforts to boost the recycling of consumer electronics. Through this venture, Alcoa intends to enter the re-cycling market. On the other hand, ERI will also get requisite funds to expand its US footprint.
Alcoa posted better-than-expected year-over-year results in the fourth quarter of 2010 with net earnings and revenues exceeding the Zacks Consensus Estimates. The company continues to benefit from its cost saving efforts. We believe the cost cuts will make Alcoa more competitive when markets fully recover. The annual global consumption of aluminum products, both upstream and downstream, is expected to double over the next 15 years.
Alcoa faces stiff competition from Aluminum Corporation Of China Limited (ACH), privately held Rio Tinto Alcan Inc. and RUSAL.
Currently, Alcoa has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long- term Neutral recommendation.
ALCOA INC (AA): Free Stock Analysis Report
ALUMINUM CP-ADR (ACH): Free Stock Analysis Report
TRANSDIGM GROUP (TDG): Free Stock Analysis Report
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