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Why Titanium Metals Shares Skyrocketed

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Titanium Metals (NYSE: TIE  ) , also known as Timet, soared a whopping 42% today after jet engine castings maker Precision Castparts (NYSE: PCP  ) agreed to buy the titanium melted and milled products company for $2.9 billion.

So what: The all-cash deal values Timet at $16.50 per share and represents a 43% premium to its closing price on Friday. Precision is making the move to streamline its supply chain and reduce costs, and judging by its own stock's 5% pop today, Wall Street is pleased with the price it's paying to do it.

Now what: The deal is expected to close by the end of 2012 and be immediately accretive to Precision's earnings. "The potential for value creation is vast -- we expect to generate significant synergies by putting our two companies together and leveraging our respective strengths," Precision Chairman and CEO Mark Donegan said. "Timet's melting expertise and [Precision's] forging and conversion assets are a complementary strategic fit." So while Timet shares are likely all popped out, Precision's newly bolstered efficiency might be a source of outsized gains going forward.

Read/Post Comments (3) | Recommend This Article (5)

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  • Report this Comment On November 12, 2012, at 8:54 PM, RonbonBFhon wrote:

    um, don't be so certain of the "popped out" part on TIE, the deal includes recognition of a possible offer from another suitor, and the current price of TIE is far below the high from 2011, even with the pop.

  • Report this Comment On November 13, 2012, at 1:20 AM, mountain8 wrote:

    I netted over 30% net profit over my buy price. I'm very happy.

  • Report this Comment On November 13, 2012, at 9:54 AM, tckjr1 wrote:

    So at five stars is it still a keeper? Have had it for a few years and it does have a steady climb in value, with a litte bit of a dip this year.

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Related Tickers

12/31/1969 7:00 PM
PCP $0.00 Down +0.00 +0.00%
Precision Castpart… CAPS Rating: *****
TIE.DL $16.50 Down +0.00 +0.00%
Titanium Metals CAPS Rating: *****