Alcoa Inc — the leading US lightweight metals technology, engineering and manufacturing group — has signed a deal to buy RTI International Metals in a $1.5 billion stock-for-stock deal. The latter is a global supplier of titanium and other special metals for the aerospace, defence, energy and medical-device sectors.

Alcoa CEO 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, share-holders and employees.”

The decision to buy RTI is based on Alcoa’s expectation that demand for titanium will continue to increase due to the growing aerospace industry. Analysts expect spending on the light metal to grow 5% annually over the next five years. Mr Kleinfeld said: “It is a key component in next-generation aircraft components, and processing the metal complements many of our current forging and casting capabilities.”

RTI CEO Dawne Hickton said: “Innovation and scale are critical to winning in both the titanium and aerospace industries today, which is why this transaction is such a natural strategic fit for both RTI and Alcoa.”

Earlier this month, Alcoa said that it is looking at more cut-backs in its smelting and refining operations because of weak world-wide prices.