(Adds detail on financing, forecasts, context on business.)
(Reuters) - Alcoa Inc has agreed to buy aircraft parts maker Firth Rixson from private equity firm Oak Hill Capital Partners for $2.85 billion in cash and stock, the company said on Thursday.
The deal will grow Alcoa's aerospace segment, and boost the aluminum giant's production of nickel and titanium goods.
Stubbornly low aluminum prices have been weighing on Alcoa, and the company has been pushing to grow its more profitable downstream businesses, which sell products like truck wheels and aircraft fuselages instead of low-margin, less-processed metal.
The company said it has secured interim financing for the deal from Morgan Stanley, and will issue "a prudent combination" of debt and equity. It expects the takeover to boost its aerospace revenue by 20 percent, to some $4.8 billion a year, but sees no impact on earnings until the second year.
The deal value includes $2.35 billion in cash, $500 million of stock and an earn-out that could be worth $150 million. (Reporting by Allison Martell; Editing by Chizu Nomiyama)
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