Carpenter Technology Corporation Soaring 10% on Buyout

Carpenter Technology Corp. CRS shares are soaring more than 10% today after the company agreed to buy Latrobe Specialty Metals for $388 million in stock and $170 million in cash. The $170 million in cash will go towards getting rid of Latrobe's debt. “Our strategy is to grow through a combination of organic growth initiatives and acquisitions - with a focus on markets that value the technical sophistication of our products," said William A. Wulfsohn, President and Chief Executive Officer of Carpenter Technology. "The Latrobe acquisition will provide needed capacity to meet strong customer demand for our premium products, improves our position in attractive segments like aerospace and energy, provides capabilities that will help us commercialize important new product offerings, and offers us improved returns on new capability investments. “We consider Latrobe an important extension of Carpenter's capabilities and are very proud of our new partnership. By combining the two companies we will improve product mix, lower cost, and reduce required capital investments for future growth. “We expect the acquisition to be accretive in year one, even including the one-time costs associated with the merger, and highly accretive in future years. Annual net synergies are anticipated to be in excess of $25 million. The combined entity should be a strong cash generator, with improved growth potential. “We are financing the cash portion of the acquisition with $170 million of available liquidity. The large percentage of equity is strong evidence of the confidence that the Latrobe ownership group has in the combined company's prospects going forward. It also preserves our strong balance sheet ahead of what we expect will be an important phase of investment and growth.” At last check, shares of Carpenter were up $5.16 to $53.04. Carpenter Technology Corporation engages in the manufacture, fabrication, and distribution of specialty metals primarily in the United States, Europe, the Asia Pacific, Mexico, and Canada.