Alcoa has agreed to acquire RTI International Metals for $1.5bn to boost its titanium offerings, advanced technologies and components for the aerospace segment.

RTI supplies titanium and specialty metal products for aerospace, defence, energy and medical device segments.

In 2014, 80% of the company’s revenues were generated from aerospace and defence industries.

Under the deal, Alcoa will issue 2.8315 of its shares to RTI shareholders for each RTI share. Based on Alcoa’s closing price on 6 March, the transaction values each RTI share at $41.

"In 2014, 80% of the company’s revenues were generated from aerospace and defence industries."

Alcoa chairman Klaus Kleinfeld said: "We are combining two innovators in materials science and process technology, shifting Alcoa’s transformation into a higher gear.

"RTI expands our aerospace portfolio market reach and positions us to capture future growth to deliver compelling value for customers, shareholders and employees."

With this acquisition, Alcoa will be able to expand its additive manufacturing capabilities to produce titanium, specialty metals and plastic parts, including titanium aluminides, which are used in making engine parts.

Alcoa expects RTI to add $1.2bn in revenues and reach profitability of 25% earnings before interest, taxes, depreciation, and amortisation margin in 2019. It intends to have synergies of $100m in 2019, driven by procurement and productivity improvements.

According to Alcoa, the aerospace market is estimated to grow at a compounded annual growth rate of up to 6% until 2019.

Subject to customary conditions and receipt of regulatory approvals, the transaction is expected to be concluded in three to six months.