Allegheny Technologies Inc. has agreed to sell two non-core forging facilities to Wynnchurch Capital LLC for $37 million in cash, so the global manufacturer can focus on its key aerospace and defense markets.
Sale proceeds will be used to further ATI’s capital deployment priorities, principally to reduce corporate debt levels and fund pension obligations.
Wynnchurch, a Chicago private equity firm, invests in middle-market companies in the U.S. and Canada that have the potential for substantial growth and operational improvement. The transaction should close during the second quarter 2019.
The facilities, located in Portland, Ind., and Lebanon, Ky., are part of ATI’s High Performance Materials & Components segment. They primarily use traditional forging methods to produce carbon steel forged products for use in the oil and gas, transportation and construction and mining industries.
“This transaction is consistent with our ongoing efforts to actively evaluate our business portfolio to ensure we’re focused on key growth opportunities for HPMC in the aerospace & defense end-markets, specifically in nickel and titanium products as well as in advanced iso-thermal and hot-die forgings,” ATI’s HPMC segment Executive Vice President John Sims said in a statement.
With $10 million of goodwill allocated to these operations from ATI’s Forged Products reporting unit, ATI’s second quarter results will include an approximate $7 million loss on this transaction. Sales from these two forging facilities in 2018 were $86 million.