SAN FRANCISCO (MarketWatch) -- The tight circle of U.S. titanium producers became the latest in the metals sector to catch the merger bug, as shares of Allegheny Technologies Inc. and others jumped Wednesday on word from aluminum giant Alcan Inc. that it would consider a deal.
Allegheny Technologies (ATI) shares surged as high as 8% to a new 52-week high of $89.49. Titanium Metals Corp. (TIE) jumped as much as 7.9% to $30.48. RTI International Metals Inc. (RTI) was last up 5.9% at $75.79.
Spurring the rally were early-morning remarks by the head of Montreal-based Alcan (AL), the world's second-biggest maker of primary aluminum.
In response to a question about future acquisitions, Chief Executive Richard Evans named titanium as one metals sector where Alcan would consider a purchase. The lure: Alcan already supplies aluminum to the aerospace market, one of the main buyers of titanium.
"We would be interested" in a titanium company, said Evans, adding that he was "not sure that this is the right time to be looking at that kind of acquisition."
Jetmakers are increasingly using titanium to build aircraft, as they try to cut down weight and improve fuel efficiency.
In mid-October, Pittsburgh-based Allegheny Technologies said that it had signed a $2.5 billion contract with Boeing Co. (BA) to supply the aerospace giant with titanium products over the next eight years.
An Allegheny spokesman declined to comment on Evans' remarks.
If Alcan does pursue a titanium maker, it will be reviewing a short list.
Russia's VSMPO-Avisma holds the biggest share of the milled titanium market, with a 31% stake, according to Citigroup Investment Research.
No. 2 producer Titanium Metals has an 18% stake; Allegheny holds 16% and RTI controls 7%, Citigroup says. The other major producers are based in Japan or Central Asia.
Alcan has also toyed with expanding in other metals.
"Everybody knows that we took a look at Inco and Falconbridge ," said Evans, who pointed out that he was glad his company ultimately shied away from trying to buy the Canadian firms.
Both of the nickel makers were the target of competing bids that that left their initial would-be buyers empty-handed.
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Also - Allegheny Tech predicts strong specialty metals demand
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Reuters U.S. Company News
4:30 p.m. 11/29/2006
NEW YORK, Nov 29 (Reuters) - Allegheny Technologies (ATI) on Wednesday said it expects strong growth in the specialty metals sector, including titanium, driven by the build-up of global infrastructure.
Allegheny Chairman and Chief Executive Pat Hassey at a Bear Stearns conference said the "infrastructure built around the world in the global economy needs specialty metals."
Hassey also said the titanium business has come back, with companies boosting titanium production.
"We can very authoritatively say that as we view this market from 2005 on to 2009, we are putting in new capacity, moving up about 84 million pounds of mill products," said Hassey.
Titanium is used by aerospace and military markets.
Shares of Allegheny gained 7 percent, or $5.81, to $88.60. Shares of Titanium Metals (TIE) gained 7.7 percent, or $2.17, to $33.42. RTI International Metals (RTI) stock climbed 5 percent, or $3.56, to $75.16 on late trading in the New York Stock Exchange.
