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Precision to Acquire Texas Honing

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Precision Castparts Corp.  recently announced its plans to acquire Texas Honing, Inc. The acquisition is expected to help Precision Castparts to expand its capabilities in the oil & gas market. Following the acquisition, Precision will emerge as the leading supplier of nickel alloy downhole casing to the oil & gas industry.     

Precision Castparts is set to pay the entire take over price in cash and expects the acquisition to be accretive to its earnings, effective immediately. The deal is expected to close by the end of fiscal 2013, subject to regulatory approvals. Texas Honing will be integrated into the Forged products segment.

Texas Honing is a leading provider of accurate, rigid tolerance pipe processing services, including honing, boring, straightening and turning. Its products are used in oil & gas drilling, completion and production applications, and other commercial markets. Texas Honing, at the time of acquisition, has three operating facilities in Houston, Texas, and employs about 200 people.

This acquisition of Texas Honing comes at an opportune time for Precision, as currently there is an upward trend in the oil & gas industry, where giants like General Electric Company (GE - Free Report) also have been acquiring companies or expanding their capabilities in the oil & gas industry. Therefore, given the expertise of Texas Honing, Precision’s capabilities in the casing manufacturing process will be more competent and enhanced. Furthermore, Precision will also be able to supply finished pipe in future project bids, thereby giving the company the opportunity to gain further share in an end market which has strong growth going forward.

Precision Castparts Corp. is a leading manufacturer of complex metal components and products - provides high-quality investment castings, forgings and fasteners/fastener systems for critical aerospace and industrial gas turbine (IGT) applications. We currently maintain a Zacks#3 Rank, which implies a short term ‘Hold’ rating on the sock.

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