Analysts say both sides win in Kennametal's purchase of ATI tungsten unit

|About: Kennametal Inc. (KMT)|By:, SA News Editor

Analysts see a win-win outcome in Kennametal's (KMT +0.8%) $605M purchase of Allegheny Technologies' (ATI +8.1%) tungsten materials business.

By purchasing one of the biggest tungsten businesses in the world, KMT will be able to expand in the aerospace and energy sectors and reduce its raw material costs; tungsten, which is harder than steel and titanium, is very difficult to recycle but ATI has learned how to do it, KMT CEO Carlos Cardoso says.

"These are very specialized businesses, and there aren't huge numbers of competitors," Bradford Research says.

For ATI, the sale will allow it to focus more on high-performance metals and flat-rolled items; in the short term, the sale strengthens ATI's balance sheet, KeyBanc says.