As filed with the Securities and Exchange Commission on March 10, 2011

Registration No. 333-171426

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

Amendment No. 3

to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

ALLEGHENY TECHNOLOGIES INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

 

 

 

 

 

 

 

 

1000 Six PPG Place

Pittsburgh, Pennsylvania 15222

(412) 394-2800

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

 

 

Jon D. Walton

Executive Vice President, Human Resources,

Chief Legal and Compliance Officer and Corporate Secretary

Allegheny Technologies Incorporated

1000 Six PPG Place

Pittsburgh, Pennsylvania 15222

(412) 394-2800

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

Copies to:

 

 

 

 

 

Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effective date of this registration statement and the effective time of the merger referred to herein.

 

If the securities being registered on this form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

If applicable, place an x in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

Exchange Act Rule 13e-4(1) (Cross-Border Issuer Tender Offer)        o

 

Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender Offer)  o

 

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

PRELIMINARY — SUBJECT TO COMPLETION — DATED MARCH 10, 2011

 

 

PROPOSED MERGER — YOUR VOTE IS VERY IMPORTANT

 

Dear Shareholder:

 

You are invited to attend a Special Meeting of Shareholders of Ladish Co., Inc., referred to as Ladish, which will be held at   :00 a.m., local time, on          , 2011 at          . At the special meeting, you will be asked to adopt the Agreement and Plan of Merger, referred to as the merger agreement, entered into by Ladish, Allegheny Technologies Incorporated, referred to as ATI, LPAD Co., a wholly owned subsidiary of ATI, referred to as LPAD, and PADL LLC, a wholly owned subsidiary of ATI, referred to as PADL, on November 16, 2010. Under the merger agreement, ATI will acquire Ladish through a merger of LPAD with and into Ladish. Following the merger, Ladish will cease to be a separate public company and will be a wholly owned subsidiary of ATI. The merger agreement is attached as Annex A to this proxy statement/prospectus.

 

At the effective time and as a result of the merger, each outstanding share of Ladish common stock will be converted into the right to receive the sum of 0.4556 of a share of ATI common stock and $24.00 in cash. Assuming that 15,707,552 shares of Ladish common stock, which is the number of shares of Ladish common stock outstanding on          , 2011, the record date for the special meeting, are outstanding immediately prior to the merger, ATI would issue an aggregate of approximately 7,384,160 shares of ATI common stock in the merger.

 

Common stock of Ladish is listed on the Nasdaq Global Select Market under the symbol “LDSH.” Common stock of ATI is listed on the New York Stock Exchange under the symbol “ATI.” Upon completion of the merger, we expect that Ladish common stock will be delisted.

 

This proxy statement/prospectus describes the merger agreement, the merger and the transactions contemplated by the merger agreement and provides information concerning the special meeting of Ladish shareholders. Before we can complete the merger, Ladish’s shareholders must adopt the merger agreement. We urge you to take the time to read this proxy statement/prospectus, and the documents incorporated into this proxy statement/prospectus by reference, carefully. Please pay particular attention to the section titled “Risk Factors” beginning on page 14. You also can obtain information about Ladish and ATI from documents that we or ATI have filed or will file with the Securities and Exchange Commission prior to the special meeting.

 

After careful consideration, the Ladish board of directors has approved and adopted the merger agreement and the transactions contemplated thereby, including the merger, and determined that the merger agreement and the merger are fair to and otherwise in the best interests of Ladish shareholders and recommends that you vote “FOR” the adoption of the merger agreement and “FOR” the proposal to approve the adjournment or postponement of the special meeting for the solicitation of additional proxies in the event there are insufficient votes present, in person or represented by proxy, at the time of the special meeting to adopt the merger agreement. Certain of Ladish’s directors and executive officers have interests in the merger that are different from, or in addition to, their interests solely as shareholders of Ladish and will directly benefit from the merger.

 

Your vote is very important. Whether or not you plan to attend the special meeting, we urge you to submit your proxy as promptly as possible. Please refer to the instructions on the enclosed proxy card.

 

Gary J. Vroman

President and Chief Executive Officer

Ladish Co., Inc.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

This proxy statement/prospectus is dated          , 2011 and is first being mailed or otherwise delivered to Ladish shareholders on or about          , 2011.

 

SOURCES OF ADDITIONAL INFORMATION

 

This proxy statement/prospectus incorporates by reference important business and financial information about ATI and Ladish from documents that each company has filed with the Securities and Exchange Commission, referred to as the SEC, but which have not been included in or delivered with this proxy statement/prospectus. For a list of documents incorporated by reference into this proxy statement/prospectus and how you may obtain them, see “Where You Can Find More Information” beginning on page 97.

 

This information is available to you without charge upon your written or oral request. You can also obtain the documents incorporated by reference into this proxy statement/prospectus by accessing the SEC’s website maintained at http://www.sec.gov.

 

In addition, Ladish’s filings with the SEC are available to the public on Ladish’s website, www.ladishco.com, and ATI’s filings with the SEC are available to the public on ATI’s website, www.atimetals.com. Information contained on Ladish’s website, ATI’s website or the website of any other person is not incorporated by reference into this proxy statement/prospectus, and you should not consider information contained on those websites as part of this proxy statement/prospectus.

 

ATI and Ladish will provide you with copies of their respective documents incorporated by reference into this proxy statement/prospectus, without charge, if you so request from:

 

 

If you wish to obtain any of these documents from ATI or Ladish, you should make your request no later than          , 2011, which is five business days before Ladish shareholders will vote to adopt the merger agreement at the special meeting, to ensure timely delivery before the special meeting.

 

Information contained in this proxy statement/prospectus regarding ATI has been provided by, and is the responsibility of, ATI and information contained in this proxy statement/prospectus regarding Ladish has been provided by, and is the responsibility of, Ladish. No one has been authorized to give you any other information, and neither ATI nor Ladish take responsibility for any information that others may give you. This proxy statement/prospectus is dated          , 2011. You should not assume that the information contained in, or incorporated by reference into, this proxy statement/prospectus is accurate as of any date other than that date. Neither Ladish’s mailing of this proxy statement/prospectus to Ladish shareholders nor the issuance by ATI of common stock in connection with the merger will create any implication to the contrary.

 

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

 

 

TO THE SHAREHOLDERS OF LADISH CO., INC.:

 

NOTICE IS HEREBY GIVEN that a special meeting of holders of common stock of Ladish Co., Inc., referred to as Ladish, will be held at   :00 a.m., local time, on          , 2011 at          , for the following purposes:

 

1. To consider and vote upon the proposal to adopt the Agreement and Plan of Merger, dated as of November 16, 2010, by and among Allegheny Technologies Incorporated, referred to as ATI, LPAD Co., a wholly owned subsidiary of ATI, referred to as LPAD, PADL LLC, a wholly owned subsidiary of ATI, and Ladish, as amended from time to time, pursuant to which ATI will acquire Ladish through a merger of LPAD with and into Ladish; and

 

2. To consider and vote upon a proposal to approve the adjournment of the meeting, if necessary, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

 

Only shareholders of record at the close of business on          , 2011 are entitled to notice of, and to vote at, the special meeting or postponements or adjournments thereof (unless the board of directors fixes a new record date for any such postponed or adjourned meeting).

 

Your vote is important. Whether or not you plan to attend the special meeting, please vote now by proxy in order to ensure the presence of a quorum. You may vote by telephone or via the Internet, as described on the enclosed proxy card, or by marking, signing and dating the enclosed proxy card on the reverse side and returning it promptly in the accompanying postage-paid envelope. A proxy may be revoked at any time prior to its exercise at the meeting, and your return of the enclosed proxy will not affect your right to vote your shares if you attend the meeting in person. Please review this proxy statement/prospectus for more complete information regarding the merger and the special meeting. If you do not return or submit your proxy or vote your shares by telephone or over the Internet or vote in person at the special meeting, the effect will be the same as a vote against the proposal to adopt the merger agreement.

 

The board of directors of Ladish has approved and adopted the merger agreement and the transactions contemplated thereby, including the merger, and determined that the merger agreement and the merger are fair to and otherwise in the best interests of Ladish shareholders and recommends that you vote “FOR” the adoption of the merger agreement and “FOR” the proposal to approve the adjournment or postponement of the special meeting for the solicitation of additional proxies in the event there are insufficient votes present, in person or represented by proxy, at the time of the special meeting to adopt the merger agreement. Certain of Ladish’s directors and executive officers have interests in the merger that are different from, or are in addition to, their interests solely as shareholders of Ladish and will directly benefit from the merger.

 

Whether or not you plan to attend the special meeting in person, please vote your proxy by telephone or through the Internet, as described on the enclosed proxy card, or complete, date, sign and return the enclosed proxy card in the enclosed envelope. The enclosed envelope requires no postage if mailed in the United States. If you attend the special meeting, you may vote in person if you wish, even if you have previously returned your proxy card or voted by telephone or through the Internet.

 

By Order of the Board of Directors,

 

 

Wayne E. Larsen

Vice President Law/Finance and Secretary

 

          , 2011

 

TABLE OF CONTENTS

 

 

The following questions and answers are intended to address briefly some questions that you, as a shareholder of Ladish, may have regarding the merger, the other transactions contemplated by the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a shareholder. To better understand these matters, and for a description of the legal terms governing the merger and other transactions contemplated by the merger agreement, you should carefully read this entire proxy statement/prospectus, including the Annexes, as well as the documents that have been incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference into this proxy statement/prospectus. All references in this proxy statement/prospectus to ATI refer to Allegheny Technologies Incorporated, a Delaware corporation; all references in this proxy statement/prospectus to Ladish refer to Ladish Co., Inc., a Wisconsin corporation; all references in this proxy statement/prospectus to LPAD refer to LPAD Co., a Wisconsin corporation and a wholly owned subsidiary of ATI; all references in this proxy statement/prospectus to PADL refer to PADL LLC, a Wisconsin limited liability company and a wholly owned subsidiary of ATI; all references in this proxy statement/prospectus to the merger agreement refer to the Agreement and Plan of Merger, dated as of November 16, 2010, by and among ATI, LPAD, PADL and Ladish, a copy of which is included as Annex A to this proxy statement/prospectus; and all references in this proxy statement/prospectus to the merger refer to the merger of LPAD with and into Ladish, with LPAD continuing as the surviving entity and a wholly owned subsidiary of ATI.

 

 

 

 

 

SUMMARY

	•	$2,400.00 in cash from ATI;
	•	45 shares of ATI common stock; and
	•	Assuming that the arithmetic average of the average of the daily high and low sales prices per share of ATI common stock as reported on the NYSE on each of the 10 trading days immediately preceding          , 2011 was $67.75, $37.94 in cash for the fractional shares of ATI common stock (calculated by multiplying 0.5600 (the remaining fractional interest in an ATI common share) by $67.75).

										Implied Value of
		ATI				Ladish				One Share of Ladish
		Common Stock				Common Stock				Common Stock
November 16, 2010		$	49.94			$	29.33			$	46.75
, 2011		$				$				$

	•	the possible employment of certain of Ladish’s executive officers by ATI after the merger, although no agreements have been proposed or entered into;
	•	the full vesting of an aggregate of approximately $113,000 of unvested deferred compensation held in investment accounts under Ladish’s Long-Term Incentive Award Plan, referred to as the 2006 Plan, and the payment within seven days of the consummation of the merger of approximately $1.4 million of fully vested deferred compensation held in investment accounts under Ladish’s Elective Deferred Compensation Plan, referred to as the Deferred Compensation Plan;

	•	the beneficial ownership of an aggregate of approximately 386,000 restricted stock units issued under the Ladish Co., Inc. Restricted Stock Unit Plan, referred to as the 2010 Plan, which will vest in full as of the effective date of the merger, and the potential to receive up to 114,000 additional restricted stock units issued under the 2010 Plan and currently held by persons who are not directors or executive officers of Ladish, but only to the extent that such additional restricted stock units are forfeited prior to the effective date of the merger;

	•	the eligibility of each of Ladish’s executive officers to receive payments from a retention pool to be established by ATI in an amount of approximately $7.0 million; and
	•	the receipt of indemnification and liability insurance benefits by directors and executive officers of Ladish from ATI.

	•	the adoption of the merger agreement by the Ladish shareholders;
	•	the expiration or termination of the applicable waiting period under the HSR Act and any other applicable antitrust law, and the taking of all actions required by, and the making of all filings required to be made with, any governmental authority under any antitrust law that are necessary to permit the consummation of the merger;
	•	the absence of any law, injunction, judgment or ruling enacted, promulgated, issued, entered, amended or enforced by any governmental authority in effect enjoining, restraining, preventing or prohibiting consummation of the merger or making the consummation of the merger illegal;
	•	the effectiveness under the Securities Act of 1933, as amended, referred to as the Securities Act, of the registration statement of which this proxy statement/prospectus forms a part and the absence of any stop order or proceedings seeking a stop order with respect to such registration statement;
	•	the approval for listing of the shares of ATI common stock to be issued in the merger on the NYSE, subject to official notice of the issuance; and
	•	subject to certain exceptions and limitations, the accuracy of the other’s representations and warranties and the performance in all material respects of its covenants.

	•	by mutual written consent of ATI and Ladish;
	•	by either ATI or Ladish, if:

	•	the merger is not consummated on or before June 30, 2011; provided that a party may not terminate the merger agreement if the failure to consummate the merger was primarily due to a failure by that party to perform any of its obligations under the merger agreement;
	•	any final, non-appealable law, injunction, judgment or ruling enacted, promulgated, issued, entered, amended or enforced by any governmental authority is in effect that enjoins, restrains, prevents or prohibits consummation of the merger or makes the consummation of the merger illegal; or
	•	the Ladish shareholders do not vote to adopt the merger agreement at the special meeting; provided that Ladish may not terminate the merger agreement if it has failed to comply in all material respects with its covenants related to the registration statement of which this proxy statement/prospectus forms a part, holding the special meeting and the non-solicitation of takeover proposals.

	•	by ATI, if:

	•	Ladish has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the merger agreement, or if any of the representations or warranties of Ladish set forth in the merger agreement fails to be true, which breach or failure, if it occurred or was continuing as of the closing date of the merger, would give rise to the failure of a condition to ATI’s obligation to close the merger and is incapable of being cured or is not cured by Ladish prior to the earlier of the 30th calendar day following Ladish’s receipt of written notice of such breach or failure from ATI and June 30, 2011;
	•	(i) Ladish’s board of directors (A) withdraws or modifies, in a manner adverse to ATI, its recommendation that the Ladish shareholders adopt the merger agreement or (B) fails to reaffirm its recommendation that the Ladish shareholders adopt the merger agreement within seven days after a takeover proposal is made public and receipt of a written request to so reaffirm from ATI or (ii) prior to the adoption of the merger agreement by Ladish’s shareholders, Ladish willfully and materially breaches its covenants in the merger agreement related to the non-solicitation of takeover proposals or its covenant to hold the special meeting; or
	•	there have occurred any events or changes that, individually or in the aggregate, have had or would reasonably be expected to have a material adverse effect on Ladish; or

	•	by Ladish, if:

	•	ATI has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the merger agreement, or if any of the representations or warranties of ATI set forth in the merger agreement fails to be true, which breach or failure, if it occurred or was continuing as of the closing date of the merger, would give rise to the failure of a condition to Ladish’s obligation to close the merger and is incapable of being cured or is not cured by ATI prior to the earlier of the 30th calendar day following ATI’s receipt of written notice of such breach or failure from Ladish and June 30, 2011; or
	•	at any time prior to the adoption of the merger agreement by Ladish’s shareholders while Ladish and its board of directors have complied with the provisions of the merger agreement with respect to a withdrawal or modification of its recommendation that Ladish’s shareholders adopt the merger agreement, Ladish is simultaneously entering into a definitive agreement to effect an unsolicited superior proposal.

	•	(i) A takeover proposal has been made known to Ladish or has been made directly to Ladish shareholders generally, or any person has publicly announced an intention (whether or not conditional or withdrawn) to make a takeover proposal, (ii) either ATI or Ladish thereafter terminates the merger agreement because the merger has not been consummated on or before June 30, 2011 or because Ladish’s shareholders do not adopt the merger agreement at the special meeting and (iii) within 12 months after the termination of the merger agreement, Ladish enters into a definitive agreement with respect to, or consummates, a transaction contemplated by any takeover proposal;
	•	ATI terminates the merger agreement due to a material and willful breach by Ladish of, or failure by Ladish to perform, Ladish’s obligations with respect to (i) the preparation of the registration statement of which this proxy statement/prospectus forms a part and this proxy statement/prospectus and the special meeting or (ii) the non-solicitation of takeover proposals;
	•	(i) A takeover proposal has been made known to Ladish or has been made directly to Ladish shareholders generally, or any person has publicly announced an intention (whether or not conditional or withdrawn) to make a takeover proposal, (ii) ATI terminates the merger agreement due to a willful breach or failure by Ladish to perform any of its representations, warranties, covenants or agreements set forth in the merger agreement in circumstances not covered by the immediately preceding bullet and (iii) within 12 months after the termination of the merger agreement, Ladish enters into a definitive agreement with respect to, or consummates, a transaction contemplated by any takeover proposal;
	•	ATI terminates the merger agreement due to (i) Ladish’s board of directors (A) withdrawing or modifying, in a manner adverse to ATI, its recommendation that the Ladish shareholders adopt the merger agreement or (B) failing to reaffirm its recommendation that the Ladish shareholders adopt the merger agreement within seven days after a takeover proposal is made public (or any person has publicly announced a bona fide intention, whether or not conditioned, to make a takeover proposal or material amendment thereto) and receipt of a written request to so reaffirm from ATI or (ii) prior to the adoption of the merger agreement by Ladish’s shareholders, Ladish willfully and materially breaching its covenants in the merger agreement related to the non-solicitation of takeover proposals or its covenant to hold the special meeting; or
	•	Ladish terminates the merger agreement at any time prior to the adoption of the merger agreement by Ladish’s shareholders, Ladish and its board of directors have complied with the provisions of the merger agreement with respect to a withdrawal or modification of its recommendation that Ladish’s shareholders adopt the merger agreement and Ladish simultaneously enters into a definitive agreement to effect an unsolicited superior proposal.

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ATI

		Year Ended December 31,
		2006				2007				2008				2009				2010
		(Dollars in millions, except operating data)
Statement of income data:
Sales:
High Performance Metals		$	1,806.6			$	2,067.6			$	1,944.9			$	1,300.0			$	1,337.5
Flat-Rolled Products			2,697.3				2,951.9				2,909.1				1,516.1				2,338.5
Engineered Products			432.7				433.0				455.7				238.8				371.8
Total sales			4,936.6				5,452.5				5,309.7				3,054.9				4,047.8
Operating profit (loss):
High Performance Metals			657.2				729.1				539.0				234.7				257.8
Flat-Rolled Products			356.1				512.0				385.0				71.3				85.9
Engineered Products			56.7				32.1				20.9				(23.8	)			12.8
Total operating profit			1,070.0				1,273.2				944.9				282.2				356.5
Income before income taxes and cumulative effect of change in accounting principle			880.7				1,154.1				867.7				64.9				125.7
Net income attributable to ATI			574.1				747.1				565.9				31.7				70.7
Balance sheet data (at end of period):
Working capital		$	1,344.8			$	1,544.7			$	1,235.5			$	1,373.0			$	1,324.1
Total assets			3,280.5				4,095.6				4,170.4				4,346.0				4,493.6
Long-term debt			529.9				507.3				494.6				1,037.6				921.9
Total debt			553.6				528.2				509.8				1,071.1				1,063.3
Cash and cash equivalents			502.3				623.3				469.9				708.8				432.3
Stockholders’ equity			1,540.4				2,279.2				2,029.0				2,089.6				2,129.4
Cash flow information:
Cash flow provided by operating activities		$	303.3			$	701.5			$	754.5			$	218.5			$	27.1
Cash flow used in investing activities			(235.8	)			(451.7	)			(513.9	)			(453.7	)			(216.8	)
Cash flow provided by (used in) financing activities			72.1				(128.8	)			(394.0	)			474.1				(86.8	)

		Year Ended December 31,
		2006				2007				2008				2009				2010
		(Dollars in millions, except operating data)
Operating data:
Volume (000’s lbs.):
High Performance Metals:
Titanium mill products			27,361				30,689				32,530				23,588				25,457
Nickel-based and specialty alloys			42,873				44,688				42,525				32,562				37,272
Exotic alloys			4,304				5,169				5,473				5,067				4,382
Flat-Rolled Products:
High value			502,524				491,891				500,375				367,195				454,874
Standard			889,105				557,016				584,389				474,950				642,255
Flat-Rolled Products total			1,391,629				1,048,907				1,084,764				842,145				1,097,129
Average Prices (per lb.):
High Performance Metals:
Titanium mill products		$	33.83			$	30.14			$	25.60			$	20.92			$	19.37
Nickel-based and specialty alloys			14.35				19.16				18.14				14.43				14.03
Exotic alloys			40.39				41.85				48.53				57.79				60.68
Flat-Rolled Products:
High value			2.50				3.22				3.26				2.49				2.83
Standard			1.61				2.40				2.13				1.22				1.62
Flat-Rolled Products combined average			1.93				2.79				2.65				1.77				2.12

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF LADISH

		Year Ended December 31,
		2010				2009				2008				2007				2006
		(In thousands, except per share and share data)
Income Statement Data:
Net Sales		$	403,132			$	349,832			$	469,466			$	424,631			$	369,290
Income from operations			46,985				9,248				39,538				52,319				48,960
Interest expense			5,613				5,050				1,971				2,528				3,548
Net income			25,375				6,094				32,205				32,288				28,481
Basic earnings per share			1.61				0.38				2.15				2.22				2.01
Diluted earnings per share			1.61				0.38				2.15				2.22				2.00
Dividends paid			—				—				—				—				—
Shares used to compute earnings per share:
Basic			15,742,247				15,901,833				14,998,437				14,516,120				14,136,946
Diluted			15,743,201				15,902,246				15,000,844				14,550,258				14,205,641
Balance Sheet Data:
Total assets		$	485,568			$	469,514			$	509,466			$	381,833			$	329,060
Net working capital			149,685				137,515				138,910				130,855				123,764
Total debt			84,285				90,000				118,900				53,500				54,100
Stockholders’ equity			251,921				225,582				223,411				201,554				152,670

 

ATI common stock is listed on the NYSE and traded under the symbol “ATI,” and Ladish common stock is listed on the Nasdaq Global Select Market and traded under the symbol “LDSH.” The following table shows the high and low reported sales prices per share of, and dividends declared with respect to, ATI and Ladish common stock for the periods indicated.

 

 

Past price performance is not necessarily indicative of likely future performance. Because market prices of ATI and Ladish common stock will fluctuate, you are urged to obtain current market prices for shares of ATI and Ladish common stock.

 

The last reported sale price of ATI’s common stock on the NYSE on          , 2011, the last practicable date before the date of this proxy statement/prospectus, was $      per share. As of          , 2011, there were        shares of ATI’s common stock outstanding held by approximately           registered holders.

 

The payment of dividends by ATI, if any, and the amount of such dividends depends upon matters deemed relevant by ATI’s board of directors on a quarterly basis, such as its results of operations, financial condition, cash requirements, future prospects, any limitations imposed by law, credit agreements or debt securities and other factors deemed relevant and appropriate. While ATI has historically paid cash dividends on its common stock on a quarterly basis, no assurance can be given that it will continue to pay dividends on its common stock in a manner and amount consistent with its historical practices, or at all, in the future.

 

Ladish has not paid cash dividends and currently intends to retain all of its earnings. Ladish does not expect to pay dividends for the foreseeable future. Ladish has agreed in the merger agreement that, through the effective time of the merger, it will not declare, set aside for payment or pay any dividend on, or otherwise make any payments to its shareholders in their capacity as such.

 

In addition to the risks described in Part I, Item 1A in each of the ATI Form 10-K and the Ladish Form 10-K and the risks described in the other information contained in or incorporated by reference into this proxy statement/prospectus, including the matters addressed under the heading “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the following risk factors in deciding how to vote.

 

Because the market value of the ATI common stock that Ladish shareholders will receive in the merger may fluctuate, Ladish shareholders cannot be sure of the market value of the ATI common stock to be issued upon completion of the merger.

 

At the effective time and as a result of the merger, each outstanding share of Ladish common stock will be converted into the right to receive 0.4556 of a share of ATI common stock and $24.00 in cash. The number of shares of ATI common stock that Ladish shareholders will be entitled to receive in the merger will not be adjusted in the event of any increase or decrease in the share price of either ATI common stock or Ladish common stock. The market value of the shares of ATI common stock that Ladish shareholders will be entitled to receive when the merger is completed will depend on the market value of shares of ATI common stock at that time and could vary significantly from the market value of shares of ATI common stock on the date the merger agreement was executed, the date of this proxy statement/prospectus or the date of the special meeting.

 

Stock price changes may result from a variety of factors, including general market and economic conditions, changes in ATI’s and Ladish’s businesses, operations and prospects, regulatory considerations and market reaction to the merger and related developments. Many of these factors are beyond either party’s control. As a result, the value represented by the merger consideration also will vary. For example, based on the range of closing prices of ATI common stock during the period from November 16, 2010, the last trading day completed before ATI and Ladish announced the execution of the merger agreement, through          , 2011, the latest practicable date before the date of this proxy statement/prospectus, the merger consideration represented a value ranging from a high of approximately $      to a low of approximately $      for each share of Ladish common stock. Because the merger is not expected to be consummated until the spring of 2011 and could be further delayed, at the time of the special meeting you will not know the market value of ATI common stock that Ladish shareholders will receive upon completion of the merger, and the market value of ATI common stock may continue to fluctuate following the merger. ATI and Ladish recommend that you obtain current market quotations for ATI common stock and Ladish common stock before voting at the special meeting. See the section entitled “Market Price and Dividend Information.”

 

Combining the businesses of ATI and Ladish may be more difficult, costly or time-consuming than expected, which may adversely affect ATI’s results and affect adversely the value of ATI’s stock following the merger.

 

ATI and Ladish have entered into the merger agreement because they believe that the merger will be beneficial to the respective companies and their respective security holders. The success of the merger will depend, in part, on ATI’s ability to realize the anticipated benefits from combining the businesses of ATI and Ladish. To realize these anticipated benefits, ATI must successfully combine the businesses of ATI and Ladish in an efficient and effective manner. If ATI and Ladish are not able to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits and cost savings of the merger may not be realized fully, or at all, or may take longer to realize than expected, and the value of ATI’s common stock may be affected adversely.

 

ATI and Ladish have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect ATI’s ability to maintain relationships with customers, employees, suppliers and other business partners following the merger or to achieve the anticipated benefits of the merger.

Specifically, issues that must be addressed in integrating the operations of Ladish into ATI’s operations in order to realize the anticipated benefits of the merger include, among other things:

 

 

Integration efforts between the two companies will also divert management attention and resources. An inability to realize the full extent of the anticipated benefits of the merger, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of ATI, which may affect adversely the value of the ATI common stock after the completion of the merger.

 

In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual synergies, if achieved at all, may be lower than what ATI expects and may take longer to achieve than anticipated. If ATI is not able to adequately address these challenges, ATI may be unable to successfully integrate Ladish’s operations into its own, or to realize the anticipated benefits of the integration of the two companies.

 

Ladish may not terminate the merger agreement to accept a superior proposal to acquire Ladish after the Ladish shareholders have adopted the merger agreement and, in certain circumstances, may be required to pay a termination fee to ATI.

 

In the merger agreement, Ladish has agreed not to, and to cause its subsidiaries and representatives not to, directly or indirectly, solicit, initiate, cause, facilitate or encourage (including by way of furnishing information) any inquiries or proposals from any third party that constitute, or may reasonably be expected to lead to, a takeover proposal to acquire Ladish or its businesses. In addition, Ladish has agreed not to participate in discussions or negotiations with any third party regarding such a takeover proposal, accept such a takeover proposal or enter into any agreement related to such a takeover proposal or enter into any agreement that would require Ladish to abandon the merger or terminate the merger agreement. However, if Ladish (i) receives an unsolicited, bona fide written acquisition proposal from a third party prior to the adoption of the merger agreement by Ladish’s shareholders in circumstances not involving a breach of the merger agreement and (ii) provides ATI with not less than 24 hours written notice of its intention to take such action, Ladish may participate in discussions and negotiations with and furnish confidential information to the third party provided that, among other requirements, the Ladish board of directors reasonably determines in good faith (after receiving the advice of a financial advisor of nationally recognized reputation) that the takeover proposal is a superior proposal and (after considering applicable provisions of state law and after consulting with and receiving the advice of outside counsel) that the failure to take such action is reasonably likely to constitute a breach by the Ladish board of directors of its fiduciary duties to Ladish shareholders under applicable law. At any time prior to the adoption of the merger agreement by Ladish’s shareholders while Ladish and its board of directors have complied with the provisions of the merger agreement with respect to a withdrawal or modification of its recommendation that Ladish’s shareholders adopt the merger agreement, Ladish may terminate the merger agreement to simultaneously enter into a definitive agreement to effect an unsolicited superior proposal. After the adoption of the merger agreement by Ladish’s shareholders, Ladish may not participate in discussions or negotiations with or provide confidential information to a third party, and Ladish may not terminate the merger agreement to accept a superior proposal. In addition, under specified circumstances, Ladish is required to pay a termination fee of $31.0 million to ATI, including if (i) Ladish terminates the merger agreement at any time prior to the adoption of the merger agreement by Ladish’s shareholders, (ii) Ladish and its board of directors have complied with the provisions of the merger agreement with respect to a withdrawal or modification of its recommendation that Ladish’s shareholders adopt the merger agreement and (iii) Ladish simultaneously enters into a definitive agreement to effect an unsolicited superior proposal. See “The Merger Agreement — No Solicitation by Ladish.”

 

These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Ladish from considering or proposing an acquisition even if it were prepared to pay

consideration with a higher value than the consideration offered in connection with the merger, or might result in a potential competing acquiror proposing to pay a less valuable per share consideration to acquire Ladish than it might otherwise have proposed to pay.

 

Any delay in completing the merger may substantially reduce the benefits that ATI expects to be obtained from the merger.

 

In addition to obtaining the required governmental clearances and approvals, the merger is subject to a number of other conditions beyond the control of ATI and Ladish that may prevent, delay or otherwise materially adversely affect its completion. See “The Merger Agreement — Conditions to Completion of the Merger.” ATI and Ladish cannot predict whether or when the conditions required to complete the merger will be satisfied. The requirements for obtaining the required clearances and approvals could delay the effective time of the merger for a significant period of time or prevent it from occurring. Moreover, each of ATI and Ladish may terminate the merger agreement if the merger is not consummated by June 30, 2011. Any delay in completing the merger may materially adversely affect the synergies and other benefits that ATI expects to achieve if the merger and the integration of the companies’ respective businesses are completed within the expected timeframe.

 

Ladish will be subject to business uncertainties and contractual restrictions while the merger is pending.

 

Uncertainty about the effect of the merger on customers, suppliers and other business partners may have an adverse effect on Ladish and consequently on ATI following the merger. These uncertainties could cause customers, suppliers, business partners and others that deal with Ladish to defer entering into contracts with Ladish or making other decisions concerning Ladish or seek to change existing business relationships with Ladish. In addition, except as expressly permitted by the merger agreement or as required by applicable law, subject to certain exceptions, until the effective time of the merger, the merger agreement restricts Ladish’s ability to take certain action and engage in certain transactions, as described under “The Merger Agreement — Conduct of Business Pending the Merger.”

 

Uncertainties associated with the merger may cause a loss of employees and may otherwise affect the future business and operations of ATI and Ladish.

 

ATI’s success after the merger will depend in part upon its ability to retain key employees of ATI and Ladish. Prior to the merger, employees of ATI or Ladish may experience uncertainty about their roles with ATI following the merger. Employees of Ladish whom are retained by ATI following the merger may also experience similar uncertainty after the completion of the merger. This may adversely affect the ability of each of ATI and Ladish to attract or retain key management, sales, technical and other personnel. In addition, Ladish’s executive officers are not subject to any non-compete agreement. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with ATI following the merger. As a result, ATI may not be able to attract or retain key employees of ATI and Ladish following the merger to the same extent that ATI and Ladish have been able to attract or retain their own employees in the past, which could have a negative impact on the business of ATI following the merger. If key employees depart, the integration of the companies may be more difficult, and ATI’s business following the merger could be materially harmed.

 

Some of Ladish’s officers and directors have interests in the merger that are different from, and in addition to, your interests and will directly benefit from the merger.

 

Some of the directors of Ladish who recommend that you vote in favor of the proposals to be considered at the special meeting of Ladish shareholders, and the officers of Ladish who provided information to Ladish’s board of directors relating to the merger and the other transactions contemplated by the merger agreement, have rights to acceleration of the vesting of certain equity-based awards and deferred compensation, may participate in a retention pool to be established by ATI and have rights to ongoing indemnification and insurance that provide them with interests in the transaction that may differ from, or be in addition to, yours. The receipt of compensation or other benefits in the transaction might result in these directors and officers being more likely to support and vote to adopt the merger agreement than if they did not have these interests. Ladish shareholders should consider whether their interests and benefits may have influenced these directors and officers to support or recommend adoption of the merger agreement. See the section entitled “The Merger — Interests of Certain Persons in the Merger” for a further

description of these interests, including the aggregate cash payments that each director and executive officer of Ladish is entitled to receive in connection with the completion of the merger.

 

The market price of ATI common stock after the merger may be affected by factors different from those affecting Ladish common stock currently.

 

The businesses of ATI and Ladish differ in many respects including product offerings and relationships with customers and suppliers, and, accordingly, the results of operations of ATI following the merger and the market price of shares of ATI’s common stock after the merger may be affected by factors different from those currently affecting the independent results of operations of Ladish. For a discussion of the businesses of ATI and Ladish and of certain factors to consider in connection with their respective businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under “Where You Can Find More Information.” See the section entitled “Market Price and Dividend Information” for additional information on the historical market value of shares of ATI common stock and Ladish common stock.

 

ATI will incur significant transaction and merger-related costs in connection with the merger.

 

ATI expects to incur approximately $7 million of out-of-pocket costs associated with the merger, consisting primarily of financial, legal and accounting fees and expenses. Similarly, Ladish expects to incur approximately $6 million of out-of-pocket costs associated with the merger, consisting primarily of financial, legal and accounting fees and expenses. ATI also expects to incur non-recurring costs associated with combining the operations of the two companies. Most of these costs will be comprised of facilities and systems consolidation costs and employment-related costs. ATI will also incur fees and costs related to formulating integration plans. Additional unanticipated costs may be incurred in the integration of the two companies’ businesses. Although ATI expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow ATI to offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term, or at all.

 

The merger may not be accretive and may cause dilution to ATI’s earnings per share, which may negatively affect the market price of ATI common stock.

 

ATI currently anticipates that the merger will be accretive to its earnings per share (on an adjusted earnings basis) within 18 to 24 months after the merger. This expectation is based on preliminary estimates, which may change materially. ATI could also encounter additional transaction-related costs or other factors such as the failure to realize all of the benefits anticipated in the merger. All of these factors could cause dilution to ATI’s earnings per share or decrease or delay the expected accretive effect of the merger and cause a decrease in the market price of ATI common stock.

 

The stock prices and businesses of ATI and Ladish may be adversely affected if the merger is not completed.

 

Completion of the merger is subject to certain closing conditions, including, among others, obtaining requisite regulatory approvals and the approval of Ladish’s shareholders. ATI and Ladish may be unable to obtain such approvals on a timely basis or at all. If the merger is not completed, the prices of ATI common stock and Ladish common stock may decline to the extent that the current market prices of ATI common stock and Ladish common stock reflect a market assumption that the merger will be completed.

 

If the merger is not completed, the respective ongoing businesses of ATI and Ladish may be adversely affected and ATI and Ladish will be subject to several risks and consequences, including the following:

 

 

 

In addition, there may be uncertainty surrounding the future direction of the businesses and strategy of ATI or Ladish on a standalone basis, and ATI or Ladish may experience negative reactions from the financial markets and from their respective employees, customers, suppliers and other business partners. ATI and Ladish are subject to litigation related to the merger and could be subject to additional litigation related to any failure to complete the merger, or to enforcement proceedings commenced against ATI or Ladish to perform their respective obligations under the merger agreement. If the merger is not completed, ATI and Ladish cannot assure their respective securityholders that the risks described above will not materialize and will not materially affect the business, financial results and stock prices of ATI or Ladish.

 

Certain existing indebtedness of Ladish, if not refinanced, amended or repaid, may decrease ATI’s financial or business flexibility, reduce its ability to incur additional indebtedness, affect its existing debt covenants, increase its borrowing costs or result in repayment or collateralization obligations.

 

Approximately $83.4 million of Ladish’s existing indebtedness is expected to be outstanding upon completion of the merger. The agreements governing Ladish’s indebtedness differ from those governing ATI’s indebtedness and in certain respects could require waivers, amendments or refinancing of the Ladish indebtedness. Although ATI and Ladish will try to resolve any such conflicts prior to closing, and ATI does not have any current plans to refinance, amend or repay such indebtedness, there can be no assurance that such conflicts will be resolved by that time or at the anticipated cost or that any future refinancing may be obtained at favorable terms. In addition, the failure to effect any such future refinancing, if required, on favorable terms may, among other things, have the effect of reducing ATI’s liquidity or operational flexibility and have a material adverse effect on ATI following the merger, including its ability to obtain further financing, take advantage of certain growth opportunities and respond to comparatively better financed competitors.

 

Ladish shareholders will have a significantly reduced ownership and voting interest after the merger and will exercise less influence over the management and policies of ATI than they do over Ladish.

 

Ladish shareholders currently have the right to vote in the election of the board of directors of Ladish and on other matters affecting Ladish. When the merger occurs, each Ladish shareholder that receives shares of ATI common stock will become a stockholder of ATI with a percentage ownership of ATI that is much smaller than the shareholder’s percentage ownership of Ladish. For example, a Ladish shareholder owning 1,000 shares of Ladish common stock as of the date of this proxy statement/prospectus would have a percentage ownership of Ladish of approximately 0.0064%. Such a Ladish shareholder would receive 455 shares of ATI common stock in the merger, representing a percentage ownership of ATI of approximately 0.0004% immediately following the merger. It is expected that the former shareholders of Ladish as a group will own approximately 7% of the outstanding shares of ATI in the aggregate immediately after the merger. Because of this, Ladish shareholders will have less influence over the management and policies of ATI than they now have over the management and policies of Ladish.

 

The shares of ATI common stock to be received by Ladish shareholders as a result of the merger will have different rights from the shares of Ladish common stock.

 

Upon completion of the merger, Ladish shareholders will become ATI stockholders and their rights as stockholders will be governed by ATI’s certificate of incorporation, ATI’s bylaws and Delaware law. Certain of the rights associated with Ladish common stock are different from the rights associated with ATI common stock. Important differences between the rights of shareholders in a Wisconsin corporation and the rights of stockholders in a Delaware corporation include differences with respect to the fiduciary duties of directors, anti-takeover provisions, rights to call stockholder meetings, ability to take stockholder action without a meeting, the stockholder vote required for certain mergers, dividends that may be declared, dissenters’ rights, indemnification of officers and

directors and limitations on directors’ liability. See the section entitled “Comparison of Rights of Ladish Shareholders and ATI Stockholders” for a discussion of the different rights associated with ATI common stock.

 

Lawsuits have been filed against Ladish, the members of the Ladish board of directors and ATI challenging the merger, and an adverse judgment in any lawsuit challenging the merger may prevent the merger from being completed within the expected timeframe, or at all.

 

Following announcement of the merger on November 17, 2010, Ladish, its directors and ATI were named as defendants in lawsuits brought by and on behalf of Ladish shareholders in Wisconsin state court and in the United States District Court for the Eastern District of Wisconsin, each challenging ATI’s acquisition of Ladish pursuant to the merger agreement, although ATI subsequently was dismissed from the case in the Eastern District of Wisconsin. The respective plaintiffs generally allege that the consideration that Ladish shareholders will receive in connection with the merger is inadequate and that Ladish’s directors breached their fiduciary duties to Ladish shareholders in negotiating and approving the merger agreement. Generally, the respective plaintiffs further allege that Ladish and ATI aided and abetted the alleged breaches by Ladish’s directors. The complaints seek various forms of relief, including injunctive relief that would, if granted, prevent the merger from being consummated in accordance with the agreed-upon terms. Ladish and ATI believe that the claims stated in the complaints against them (and, in Ladish’s case, also its directors) are all without merit and intend to defend the actions vigorously. See “The Merger — Litigation Relating to the Merger.”

 

One of the conditions to the closing of the merger is the absence of any law, injunction, judgment or ruling by any governmental authority enjoining, restraining, preventing or prohibiting the consummation of the merger or making the merger illegal. As such, if the plaintiffs are successful in obtaining an injunction prohibiting Ladish or ATI from consummating the merger on the agreed-upon terms, then such injunction may prevent the merger from being completed within the expected timeframe, or at all.

 

ATI may pursue other strategic transactions in the future, which could be difficult to implement, disrupt its business or change its business profile significantly.

 

ATI will continue to consider opportunistic strategic transactions, which could involve acquisitions or dispositions of businesses or assets. Any future strategic transaction could involve numerous risks, including:

 

 

If ATI enters into significant strategic transactions in the future, related accounting charges may affect its financial condition and results of operations, particularly in the case of any acquisitions. In addition, the financing of any significant acquisition may result in changes in its capital structure, including the incurrence of additional indebtedness. Conversely, any material disposition could reduce its indebtedness or require the amendment or refinancing of a portion of its outstanding indebtedness. ATI may not be successful in addressing these risks or any other problems encountered in connection with any strategic transactions.

 

This proxy statement/prospectus, and the documents incorporated herein by reference, include certain forward-looking information about ATI, Ladish and the combined company after completion of the merger that is intended to be covered by the safe harbor for “forward-looking statements” provided by the U.S. Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. Representatives of ATI and Ladish may also make forward-looking statements. Forward-looking statements include information concerning ATI’s and Ladish’s possible or assumed future results of operations, including descriptions of ATI’s and Ladish’s business strategies. These statements often include words such as “believe,” “expect,” “project,” “anticipate,” “intend,” “plan,” “estimate,” “seek,” “will,” “may,” “would,” “should,” “could,” “can,” “feel,” “forecasts,” “to be” or similar expressions. These statements are based on ATI’s and Ladish’s expectations and beliefs at the time such statements were made; however, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected or anticipated. As you read and consider this proxy statement/prospectus, you should understand that these statements are not guarantees of performance or results. These forward-looking statements are subject to numerous risks and uncertainties, including the risks described in this proxy statement/prospectus under “Risk Factors,” that could cause actual results to differ

 

Some other risks and uncertainties include, but are not limited to:

 

 

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the factors described under the headings “Forward-Looking Statements” in the ATI Form 10-K and “Forward Looking Statements” in the Ladish Form 10-K. See “Where You Can Find More Information” for the location of information incorporated by reference into this proxy statement/prospectus.

Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements, and the factors that will determine these results are beyond ATI’s or Ladish’s ability to control or predict.

 

ATI and Ladish caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this proxy statement/prospectus, in the case of forward-looking statements contained in this proxy statement/prospectus, or the dates of the documents incorporated by reference in this proxy statement/prospectus, in the case of forward-looking statements made in those incorporated documents.

 

Except to the extent required by applicable law or regulation, ATI and Ladish undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

All subsequent written or oral forward-looking statements concerning the merger or other matters addressed in this proxy statement/prospectus and attributable to ATI or Ladish or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

 

Neither ATI’s nor Ladish’s independent registered public accounting firms have compiled, examined or otherwise applied procedures to the prospective financial information presented herein and, accordingly, do not express an opinion or any other form of assurance on such information or its achievability.

 

Overview

 

This proxy statement/prospectus is being provided to Ladish shareholders as part of a solicitation of proxies by the Ladish board of directors for use at the special meeting of Ladish shareholders and at any adjournments or postponements thereof. This proxy statement/prospectus is first being furnished to shareholders of Ladish on or about          , 2011. In addition, this proxy statement/prospectus constitutes a prospectus of ATI in connection with the issuance by ATI of its common stock in connection with the merger. This proxy statement/prospectus provides Ladish shareholders with information they need to know to be able to vote or instruct their vote to be cast at the special meeting of Ladish shareholders.

 

Date, Time and Place of the Special Meeting

 

The special meeting of Ladish shareholders will be held on          , 2011, at   :00 a.m., local time, at           .

 

Purposes of the Special Meeting

 

At the special meeting, Ladish’s shareholders will be asked:

 

1. To consider and vote upon the proposal to adopt the Agreement and Plan of Merger, dated as of November 16, 2010, by and among ATI, LPAD, PADL and Ladish, as amended from time to time, pursuant to which ATI will acquire Ladish through a merger of LPAD with and into Ladish; and

 

2. To consider and vote upon a proposal to approve the adjournment of the meeting, if necessary, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

 

Your properly signed and dated proxy card will be voted in accordance with the board’s recommendation unless you specify otherwise.

 

Record Date; Outstanding Shares; Shares Entitled to Vote

 

The record date for the special meeting of Ladish shareholders is          , 2011. Only shareholders of record at the close of business on          , 2011 are entitled to receive notice of, and to vote at, the special meeting or postponements or adjournments thereof (unless the board of directors fixes a new record date for any such postponed or adjourned meeting). You are entitled to one vote for each share of Ladish common stock you own. At the close of business on          , 2011, there were approximately 15,707,552 shares of Ladish common stock outstanding and entitled to vote, held by approximately           holders of record and, based on information available as of the date of this proxy statement/prospectus,           beneficial holders.

 

Quorum; Vote Required; Abstentions and Broker Non-Votes

 

No business may be transacted at the special meeting unless a quorum is present. Adoption of the merger agreement requires the affirmative vote of a majority of all the votes entitled to be cast by holders of outstanding shares of Ladish common stock. If a quorum is not present, the affirmative vote of a majority of the shares of Ladish common stock represented at the special meeting will have the power to adjourn the special meeting in accordance with Ladish’s by-laws. In addition, if fewer shares of Ladish common stock are voted in favor of the adoption of the merger agreement than the number required for its adoption, the special meeting may be adjourned or postponed to allow additional time for obtaining additional proxies or votes. At any subsequent reconvening of the special meeting, all proxies will be voted in the same manner as they would have been voted at the original convening of the special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the subsequent meeting. All shares of Ladish common stock represented at the special meeting, including abstentions and broker non-votes, will be included in the calculation of the number of shares of Ladish common stock represented at the special meeting for purposes of determining whether a quorum has been achieved.

Adoption of the merger agreement requires the affirmative vote of a majority of all the votes entitled to be cast by holders of outstanding shares of Ladish common stock. 7,853,777 shares of Ladish common stock must be voted in favor of the adoption of the merger agreement in order for the merger agreement to be adopted by the Ladish shareholders, based upon the number of shares of Ladish common stock outstanding on             , 2011, the record date for the special meeting. Because the affirmative vote of all the votes entitled to be cast by holders of outstanding shares of Ladish common stock is needed to proceed with the merger, if you abstain from voting, or fail to vote, with respect to the proposal to adopt the merger agreement, it will have the same effect as a vote “AGAINST” the adoption of the merger agreement. Any adjournment of the special meeting by vote of Ladish shareholders for the purpose of soliciting additional proxies or for any other purpose must be approved by the affirmative vote of a majority of the shares of Ladish common stock represented at the special meeting.

 

In accordance with the rules of the NYSE, banks, brokers and other nominees who hold shares of Ladish common stock in “street name” for their customers but do not have discretionary authority to vote the shares may not exercise their voting discretion with respect to the adoption of the merger agreement. Accordingly, if banks, brokers or other nominees do not receive specific voting instructions from the beneficial owner of such shares, they may not vote such shares with respect to the adoption of the merger agreement or the adjournment of the special meeting to solicit further proxies to approve the proposal to adopt the merger agreement. For shares of Ladish common stock held in “street name,” only shares of Ladish common stock affirmatively voted “FOR” adoption of the merger agreement or “FOR” the adjournment of the special meeting to solicit further proxies to approve the proposal to adopt the merger agreement will be counted as a favorable vote for such proposal. Failing to provide voting instructions to your bank, broker or other nominee will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

 

Attendance at the Special Meeting

 

All holders of shares of Ladish common stock as of the close of business on          , 2011, the record date for the special meeting, including registered shareholders (shareholders holding shares in their own name) and beneficial owners of stock registered in the “street name” of a bank, broker or other nominee, and Ladish’s invited guests may attend the special meeting. If you are a registered shareholder, please be prepared to provide proper identification, such as a driver’s license. If you hold your shares in “street name,” you will need to provide proof of ownership, such as a recent account statement or letter from your bank, broker or other nominee, along with proper identification.

 

How to Vote

 

Voting in Person

 

Registered shareholders will be able to vote in person at the special meeting. If you are not a registered shareholder, but instead hold your shares in “street name” through a bank, broker or other nominee, you must provide a proxy executed in your favor from your bank, broker or other nominee in order to be able to vote in person at the special meeting.

 

Voting by Proxy

 

To ensure that your shares are represented at the special meeting, we recommended that you vote promptly by proxy, even if you plan to attend the special meeting in person. If you attend the special meeting and wish to vote in person or change your vote, you can always revoke your proxy by voting at the meeting.

 

If you are a registered shareholder, you may vote by proxy using one of the methods described below.

 

Vote by Telephone or via the Internet.  This proxy statement/prospectus is accompanied by a proxy card with instructions for voting. You may vote by telephone by calling the toll-free number or via the Internet by accessing the Internet address as specified on the enclosed proxy card. Your shares will be voted as you direct in the same manner as if you had completed, signed, dated and returned your proxy card, as described below.

 

Vote by Proxy Card.  If you complete, sign, date and return the enclosed proxy card by mail so that it is received before the special meeting, your shares will be voted in the manner directed by you on your proxy card. You may vote “FOR,” vote “AGAINST” or abstain from voting with respect to each of the proposal to adopt the

merger agreement and the proposal to adjourn the special meeting to solicit further proxies to approve the proposal to adopt the merger agreement.

 

If you return your signed proxy card, but do not specify how you want to vote your shares, your shares will be voted “FOR” the proposal to adopt the merger agreement and the proposal to adjourn the special meeting. In addition, your shares will be voted in the discretion of the persons appointed as proxies in the proxy card as to any other business that is properly brought before the special meeting or any adjournment or postponement of the meeting. Proxy cards that are returned without a signature will not be counted as present at the special meeting and cannot be voted.

 

If your shares are held by a bank, broker or other nominee on your behalf in “street name,” your bank, broker or other nominee will send you instructions as to how to vote your shares by proxy. Many banks and brokerage firms have a process for their customers to provide voting instructions by telephone or via the Internet. If your shares are held in an account at a bank or brokerage firm that participates in such a program, you may direct the vote of these shares by telephone or over the Internet by following the voting instructions enclosed with the proxy form from the bank or brokerage firm. The Internet and telephone proxy procedures are designed to authenticate shareholders’ identities, to allow shareholders to give their proxy voting instructions and to confirm that those instructions have been properly recorded. Votes directed by telephone or over the Internet through such a program must be received by  :00 a.m., Central Time, on          , 2011. Directing the voting of your shares will not affect your right to vote in person if you decide to attend the special meeting; however, you must first obtain a signed and properly executed legal proxy from your bank, broker or other nominee to vote your shares held in “street name” at the special meeting. Requesting a legal proxy prior to the deadline described above will automatically cancel any voting directions you have previously given by telephone or over the Internet with respect to your shares. If you do not provide your bank, broker or other nominee with instructions as to how to vote your shares, your bank, broker or other nominee will not be able to vote your shares, which will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

 

Revoking Your Proxy

 

Your proxy is revocable. If you are a registered shareholder, you can revoke your proxy at any time before it is voted at the special meeting by:

 

 

Attending the special meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to Ladish or by sending a written notice of revocation to Ladish’s secretary, you should ensure that you mail your new proxy card or written notice of revocation in sufficient time for it to be received by Ladish before the day of the special meeting.

 

If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee in order to revoke your proxy or submit new voting instructions.

 

Stock Ownership and Voting by Ladish’s Directors and Executive Officers

 

At the close of business on          , 2011, the record date for the special meeting, Ladish’s directors and executive officers and their respective affiliates had the right to vote approximately 32,000 shares of the then-outstanding Ladish voting stock at the special meeting, representing approximately 0.2% of Ladish common stock outstanding and entitled to vote at the special meeting. It is expected that Ladish’s directors and executive officers will vote their shares “FOR” the adoption of the merger agreement, although none of them has entered into any agreement requiring them to do so.

Proxy Solicitations

 

Ladish is soliciting proxies for the special meeting from Ladish shareholders. Ladish will bear the entire cost of soliciting proxies from Ladish shareholders. In addition to this mailing, Ladish’s directors, officers and employees (who will not receive any additional compensation for their services) may solicit proxies personally, electronically or by telephone. Ladish will also request that banks, brokerage houses and other custodians, nominees and fiduciaries send proxy materials to the beneficial owners of Ladish common stock and will, if requested, reimburse them for their reasonable out-of-pocket expenses in doing so.

 

Shareholders should not submit any stock certificates with their proxy cards. A transmittal form with instructions for the surrender of certificates representing shares of Ladish common stock will be mailed to Ladish shareholders if the merger is completed.

 

Dissenters’ Rights

 

Dissenters’ rights are statutory rights that enable shareholders to dissent in certain circumstances from an extraordinary transaction, such as a merger, and to demand that a corporation pay the shareholders the fair value of their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction. Under Wisconsin law, dissenters’ rights generally are not available to holders of shares, such as shares of Ladish common stock, that are listed on a national securities exchange, unless the transaction is a business combination involving a significant shareholder or the corporation’s articles of incorporation provide otherwise. Ladish’s articles of incorporation do not otherwise provide for dissenters’ rights. Accordingly, holders of Ladish common stock are not entitled to dissenters’ rights in connection with the merger.

 

Other Business

 

Ladish is not aware of any other business to be acted upon at the special meeting. If, however, other matters are properly brought before the special meeting, your proxies will have discretion to vote or act on those matters according to their best judgment and they intend to vote the shares as the Ladish board of directors may recommend.

 

Adjournments

 

Adjournments of the special meeting may be made for the purpose of, among other things, soliciting additional proxies from Ladish shareholders. At the adjourned meeting, Ladish may transact any business that it might have transacted at the original meeting, provided that a quorum is present at such adjourned meeting. Proxies submitted by Ladish shareholders for use at the special meeting will be used at any adjournment or postponement of the meeting. References to the special meeting in this proxy statement/prospectus are to such special meeting as so adjourned or postponed from time to time.

 

Assistance

 

If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact Ladish’s Investor Relations department at (414) 747-2611.

 

The following discussion contains certain material information about the merger. The discussion is subject, and qualified in its entirety by reference, to the merger agreement and the opinion of Baird included as Annexes A and B, respectively, to this proxy statement/prospectus. ATI and Ladish urge you to read carefully this entire document, including the merger agreement, for a more complete understanding of the merger.

 

General

 

Under the terms of the merger agreement, LPAD will be merged with and into Ladish, with Ladish continuing as the surviving entity and a wholly owned subsidiary of ATI. Following the merger, Ladish will no longer be a separate publicly held corporation. Immediately following the merger, Ladish will be merged with and into PADL, with PADL continuing as the surviving entity and a wholly owned subsidiary of ATI. Following the merger and other transactions contemplated by the merger, ATI expects to continue to operate the Ladish businesses under the name “Ladish Co.”

 

Each share of Ladish common stock will be converted in the merger into the right to receive 0.4556 of a share of ATI common stock and $24.00 in cash. ATI will not issue fractional shares in the merger. Instead, it will pay cash for fractional shares of common stock based on the arithmetic average of the daily average of the high and low sales prices per share of ATI common stock as reported on the NYSE during the 10 trading days immediately preceding the date on which the merger is consummated.

 

Shares of ATI common stock issued and outstanding at the completion of the merger will remain outstanding, and rights associated with those shares will be unaffected by the merger. ATI’s common stock will continue to trade on the NYSE following the merger under the symbol “ATI.”

 

The merger agreement was the culmination of arms-length negotiations between representatives of ATI and Ladish, including their respective counsel. Because one-half of the merger consideration is in the form of ATI common sock and the other half in cash, the transaction was structured as a forward triangular merger (with the merger subsidiary, LPAD, merging with and into Ladish) to enable Ladish shareholders to receive shares of ATI common stock in the merger in a tax-free reorganization. ATI has informed Ladish that it would only agree to a fixed exchange ratio with regard to the shares of ATI common stock to be issued in the merger, and Ladish concurred. In addition to certain representations and warranties of Ladish and agreements of Ladish regarding the conduct of its business pending the merger, the negotiations focused primarily on the fiduciary duty standard under which Ladish could explore or accept a superior proposal from a third party to acquire it, the ability of ATI to make another proposal to acquire Ladish in light of the superior proposal and within what time frame, the scope of Ladish’s obligation to call and hold a meeting of its shareholders to adopt the merger agreement, the circumstances under which ATI or Ladish could terminate the merger agreement and Ladish would be obligated to pay ATI the termination free, the amount of the termination fee (which the parties agreed would be equal to approximately 4% of the merger consideration), and the agreed upon venue for any litigation between the parties concerning the merger agreement.

 

See “The Merger Agreement” for additional and more detailed information regarding the merger agreement, which is the legal document governing the merger, including information about the conditions to the merger and the provisions for terminating or amending the merger agreement.

 

Background of the Merger

 

Each of Ladish’s and ATI’s board of directors has from time to time separately engaged with the senior management of their respective companies in reviews and discussions of potential strategic alternatives and has considered ways to enhance their respective performance and prospects in light of competitive and other relevant developments. These reviews and discussions have focused on, among other things, the business environment facing their respective industries generally and each respective company in particular, as well as conditions in such industries and the capital and debt financing markets. For each company, these reviews have also included periodic discussions with respect to potential transactions that would further its strategic objectives and enhance stockholder value and the potential benefits and risks of those transactions.

ATI previously had given consideration to potential strategic transactions to provide upstream integration opportunities, particularly with regard to serving aerospace end markets, including with companies having forging capabilities. By the end of 2008, aerospace end markets for ATI products had grown significantly and accounted for nearly 30% of ATI sales in 2008. At a meeting of the ATI board of directors in May 2009, management discussed with the ATI board of directors the prospect of exploring a strategic transaction with Ladish, which was one of very few remaining independent domestic forgers capable of producing large, very specialized alloy components used in aerospace applications. The ATI board of directors authorized ATI management to initiate discussions with Ladish regarding a strategic combination.

 

ATI and Ladish have had a long-standing customer/supplier relationship pursuant to which Ladish has purchased specialty metals from ATI. The commercial relationship between ATI and Ladish has existed for over 25 years. For the years ended December 31, 2008 and 2009, Ladish purchased ATI products with aggregate purchase prices of approximately $73 million and $44 million, respectively.

 

In May 2009, L. Patrick Hassey, ATI’s Chairman and Chief Executive Officer, contacted Kerry L. Woody, then Ladish’s Chief Executive Officer and a member of its board of directors, and Wayne E. Larsen, Ladish’s Vice President Law/Finance and Secretary, to suggest that ATI and Ladish consider a potential strategic combination. Mr. Hassey did not present any specific proposal at that time. He did, however, point out that (i) ATI would be willing to offer a significant premium over recent market prices of Ladish common stock, (ii) that the consideration would be shares of ATI common stock in a tax-free transaction, enabling Ladish shareholders to participate in the future of the combined company, (iii) that the transaction would differentiate the combined company in the markets it serves and (iv) that no significant regulatory issues were anticipated. He also expressed his belief that the combined company would have a greater critical mass of technological, financial, operational and marketing capabilities that would enable it to compete more successfully in the increasingly more competitive and consolidating global markets, and that the inherent synergies of the combination would provide lower overall operating costs, further enabling the combined company to more effectively compete in the highly competitive global marketplace. Mr. Woody responded that he would discuss the matter with members of Ladish’s board of directors and subsequently reported on his conversation with Mr. Hassey to Ladish’s board of directors.

 

Mr. Hassey contacted Messrs. Woody and Larsen on August 30, 2009 to further discuss the strategic reasons for combining the companies and the potential benefits. Mr. Hassey reiterated the strategic factors that he had discussed with Messrs. Woody and Larsen in May 2009, as well as the benefits to the combined company of the near completion of several ATI strategic capital projects designed to expand production capacity of various special metals and alloys and ATI’s view of the overall complementary fit of the two companies. In September 2009, representatives of ATI and Ladish began the process of negotiating the terms of a confidentiality agreement. Mr. Larsen provided a draft of a confidentiality and standstill agreement to Jon D. Walton, ATI’s Executive Vice President, Human Resources, Chief Legal and Compliance Officer and Corporate Secretary, on September 4, 2009. ATI’s senior management, including Messrs. Hassey and Walton and Richard J. Harshman, ATI’s then Executive Vice President, Finance and Chief Financial Officer and currently ATI’s President and Chief Operating Officer, reviewed and discussed the draft confidentiality and standstill agreement over the following days. At a meeting of ATI’s board of directors on September 10, 2009, ATI’s senior management discussed with ATI’s board of directors the views of senior management regarding a potential strategic combination with Ladish and the draft confidentiality and standstill agreement that had been provided by Mr. Larsen. Mr. Walton provided a revised draft confidentiality and standstill agreement to Mr. Larsen on September 14, 2009. Mr. Larsen indicated to Mr. Walton on September 15, 2009 that he would review the revised draft confidentiality and standstill agreement with Ladish’s board of directors at its meeting on September 25, 2009.

 

On September 25, 2009, Ladish announced that Mr. Woody had retired as Ladish’s Chief Executive Officer and resigned from Ladish’s board of directors. At that time, Ladish’s board of directors appointed Gary J. Vroman as Ladish’s President and Chief Executive Officer and elected Mr. Vroman as a member of Ladish’s board of directors. Mr. Larsen also then was elected as a member of Ladish’s board of directors. The Ladish board of directors also concluded that, as a result of these management changes, which had the potential in at least the short term to cause customers, vendors or shareholders to question Ladish’s direction or stability, and the then current economic and financial climate, which had resulted in Ladish’s stock price being far lower than its 2007 and 2008 highs, that it was not an appropriate time to explore a strategic combination with ATI. Mr. Larsen communicated to Mr. Walton on

September 28, 2009 that, as a result of the management changes, Ladish did not intend to take actions in furtherance of a potential strategic combination with ATI at that time.

 

On October 6, 2009, ATI’s board of directors held a meeting to further consider a potential strategic combination with Ladish. ATI’s board of directors received at that meeting an update from ATI’s senior management and considered recent trends in Ladish’s stock price, which, like ATI’s stock price, was recovering after having reached very low levels during the financial crisis and recession. In particular, ATI’s board of directors noted that the closing price for Ladish’s common stock on October 5, 2009 was $14.59 per share, after reaching the 52-week low of $5.21 per share on March 9, 2009. ATI’s board of directors also considered that the 90- and 120-day moving averages for Ladish’s stock price were $13.52 and $11.59 per share, respectively, which were believed to demonstrate upward momentum over a period of several months. Additional topics reviewed in general terms, which were presented by management, included (i) publicly-available business and financial information regarding Ladish, (ii) the merger and acquisition environment for the specialty metals industry generally, (iii) the strategic rationale for the merger, which was to create a more vertically integrated supply chain for customers, particularly in the aerospace industry, (iv) an estimated $5 million of potential pre-tax synergies in 2010 anticipated to result from the proposed merger, which consisted largely of the elimination of expenses associated with Ladish being a public company, including legal and accounting expenses and expenses associated with compliance with federal securities laws and securities exchange rules, (v) the potential pro forma impact of the merger, which was not quantified at that time, on ATI’s earnings per share, including the general impact of a potential merger consideration representing a price of $20.00 per share of Ladish common stock and consisting of approximately 0.58 of a share of ATI common stock per share of Ladish common stock on whether the transaction would be accretive or dilutive to ATI’s pro forma earnings per share in 2010, (vi) the estimated relative contributions of ATI and Ladish to various financial metrics of the combined company, including earnings before interest, taxes, depreciation and amortization, or EBITDA, and free cash flows, based on information about Ladish then publicly available, and (vii) and the potential pro forma ownership in the combined company of stockholders of ATI and shareholders of Ladish. ATI’s board of directors authorized ATI’s senior management to send a letter to Ladish’s board of directors in which ATI’s interest in a potential strategic combination with Ladish would be reiterated.

 

On October 13, 2009, Mr. Hassey sent a letter to Mr. Vroman in which Mr. Hassey proposed a business combination with Ladish in which Ladish’s shareholders would receive an unspecified premium over the current and three-month trailing average market price. The letter indicated that ATI contemplated that the form of consideration would be shares of ATI common stock. The reason that ATI proposed an all-stock transaction was that it was believed that the ability of Ladish shareholders to continue to participate in the future of the combined company, together with the tax-free nature of the transaction, would be attractive to Ladish shareholders. ATI also indicated in the letter that, as proposed, the potential transaction would be subject to ordinary course due diligence, execution of a mutually acceptable definitive agreement and customary conditions.

 

At a meeting of Ladish’s board of directors on November 4, 2009, Mr. Hassey’s October 13, 2009 letter was discussed extensively. The Ladish board of directors concluded that Ladish’s shareholders should receive better value if management continued its long-term strategic plan and reaped the benefits of the significant capital investments Ladish had made in recent years, rather than entertaining an offer from ATI near a market bottom. On November 6, 2009, Mr. Vroman contacted Mr. Hassey and stated that Ladish’s board of directors and management team were in the midst of executing a long-term strategic plan for the growth and expansion of Ladish and that Ladish’s board of directors did not believe it to be an appropriate time for Ladish to undertake a strategic combination with ATI.

 

On November 9, 2009, Mr. Hassey sent a letter to Mr. Vroman, setting forth a non-binding proposal for a strategic combination, subject to the negotiation and execution of a definitive agreement. ATI proposed a merger transaction in which each outstanding share of Ladish common stock would be converted into 0.614 of a share of ATI common stock, representing a price of approximately $20.00 per share of Ladish common stock and a premium of approximately 35.7% over the 50-day moving average price of $14.74 per share of Ladish common stock and a 58.2% premium over the closing stock price for Ladish common stock on November 6, 2009 of $12.64 per share.

 

On November 13, 2009, Mr. Vroman sent a letter to Mr. Hassey in which Mr. Vroman acknowledged receipt of Mr. Hassey’s November 9, 2009 letter and the communication of the contents of that letter to Ladish’s board of

directors. Mr. Vroman further indicated that the position of Ladish’s board of directors and management team conveyed to Mr. Hassey on November 6, 2009 remained unchanged.

 

On November 13, 2009, Mr. Vroman suggested to Mr. Hassey that the two of them meet during the week of November 16, 2009 at an industry event in London that both Mr. Vroman and Mr. Hassey would be attending. Mr. Vroman and Mr. Hassey met in person in London on November 19, 2009 and agreed to suspend discussions of a potential strategic combination pending analysis of Ladish’s and ATI’s respective results for the fourth quarter of 2009.

 

On March 15, 2010, Mr. Walton sent by email to Mr. Larsen a copy of a letter dated March 15, 2010 from Mr. Hassey to Ladish’s board of directors. The letter reiterated ATI’s interest in pursuing a possible strategic combination with Ladish. ATI proposed in the letter a merger transaction in which each outstanding share of Ladish common stock would be converted into 0.542 of a share of ATI common stock, representing a price of approximately $27.50 per share of Ladish common stock and a premium of approximately 77.5% over the 90-day moving average price of $15.51 per share of Ladish common stock and a 35% premium over the closing price for Ladish common stock on March 12, 2010 of $20.39 per share.

 

Mr. Larsen spoke by telephone with Mr. Walton on March 25, 2010 and acknowledged receipt of Mr. Hassey’s March 15, 2010 letter. Mr. Larsen indicated that a meeting of Ladish’s board of directors was scheduled for March 29, 2010 and that the March 15, 2010 letter would be discussed at that meeting.

 

On March 25, 2010, a representative of another bidder (“Bidder X”) made an unsolicited contact with Ladish and expressed Bidder X’s interest in a business combination with Ladish.

 

On March 29, 2010, the Ladish board of directors held a special meeting, at which a representative of Foley & Lardner LLP, Ladish’s outside counsel, which is referred to as Foley & Lardner, was present for a portion. At the meeting, the board of directors discussed the ATI offer and the initial expression of interest from Bidder X. The board also discussed with the representative of Foley & Lardner the applicable fiduciary duties of the board of directors in connection with the offer and expression. The Ladish board of directors authorized management to continue preliminary discussions with ATI and to share limited due diligence information, subject to receipt of an appropriate confidentiality and standstill agreement. Also on March 29, 2010, Ladish retained Baird as its financial advisor in connection with a potential strategic combination.

 

On March 31, 2010, Mr. Larsen sent a draft confidentiality and standstill agreement to Mr. Walton. On April 1, 2010, Ladish executed and delivered to ATI the confidentiality and standstill agreement, which was dated as of April 1, 2010. On April 12, 2010, ATI executed the confidentiality agreement and delivered its signature page to Ladish. In the confidentiality and standstill agreement, ATI and Ladish agreed to a “standstill” provision providing that, subject to certain exceptions, neither company would, for a period of three years, engage in certain types of transactions to acquire securities or assets of the other company or take other actions seeking to control or influence the other company.

 

On April 15, 2010, Messrs. Vroman and Larsen met with officers of Bidder X regarding a potential business combination between Bidder X and Ladish. Bidder X did not make any proposal or provide an indicative price range to Ladish at or around that time, but asked that Ladish contact Bidder X if Ladish decided that it was an appropriate time for it to enter into a strategic business combination.

 

On April 19, 2010, Messrs. Hassey, Harshman, Walton, Vroman and Larsen met at Ladish’s offices in Cudahy, Wisconsin to further discuss ATI’s and Ladish’s respective interests in pursuing a strategic combination. Also in April 2010, ATI retained Credit Suisse Securities (USA) LLC, referred to as Credit Suisse, as its financial advisor in connection with a potential strategic combination with Ladish.

 

On May 4, 2010, a special meeting of the Ladish board of directors was held, with representatives of Baird and Foley & Lardner. At the meeting, representatives of Baird discussed with the Ladish board of directors Baird’s preliminary valuation analyses. In particular, Baird provided its perspective on (i) Ladish’s financial performance on a stand-alone basis and relative to the selected public companies, (ii) ATI’s March 15, 2010 proposal, (iii) process considerations and (iv) other potential acquirers of Ladish. In addition, a representative of Foley & Lardner

summarized for the board of directors the fiduciary duties of the board of directors in connection with a business transaction.

 

Over the following weeks, representatives of ATI and Ladish, including their respective financial advisors, continued to engage in preliminary conversations regarding the structure of various aspects of and amount of consideration that would be involved in a proposed business combination, with the parties being in agreement that such a business combination would be structured as a merger, and review limited initial due diligence information. During this time Baird continued to advise Ladish on process considerations, and Credit Suisse compiled data at the request of ATI and assisted with certain aspects of the due diligence process. Also during this time, the Ladish board of directors met several times at which meetings the board of directors was updated on the status of negotiations and gave further instruction and advice to management, Baird and Foley & Lardner as to the conduct of the negotiations.

 

On August 17, 2010, Mr. Hassey sent to Mr. Vroman a letter from Mr. Hassey to the members of Ladish’s board of directors. The letter reiterated ATI’s interest in pursuing a possible strategic combination with Ladish. ATI proposed in the letter a merger transaction in which Ladish shareholders would receive $40.12 for each outstanding share of Ladish common stock, consisting of $10.03 of cash and $30.09 in ATI common stock. The letter noted that this proposed consideration represented a premium of approximately 43.7% over the 30-day volume weighted average price of $27.92 per share of Ladish common stock, 53.4% over the 60-day volume weighted average price of $26.16 per share of Ladish common stock, 54.0% over the 90-day volume weighted average price of $26.05 per share of Ladish common stock and 42.0% over the closing price for Ladish common stock on August 16, 2010 of $28.25 per share.

 

The Ladish board of directors discussed ATI’s letter of August 17, 2010 and the negotiations with ATI generally at special meetings of the board held on August 19 and 25, 2010. At these meetings representatives of Baird discussed with the Ladish board of directors Baird’s updated preliminary valuation analyses. The board of directors also discussed other potential partners for a business combination involving Ladish. The Ladish board of directors and the Baird representatives also discussed the ability of other potential partners to complete such a transaction. In addition, a representative of Foley & Lardner reviewed the fiduciary duties of the board of directors in connection with a business combination transaction. The Ladish board of directors concluded that it was not in the best interests of Ladish or its shareholders to actively market Ladish to a large number of potential bidders primarily because ATI had indicated that it was not interested in participating in such an auction process and because of the potentially destabilizing effects such an auction process can have on a company’s employees, customer and suppliers. While the Ladish board of directors was willing to consider a transaction with a compelling price and long-term strategic benefits, such as the merger that ATI ultimately proposed, it was not committed to selling the company.

 

In early September 2010, Mr. Vroman informed Mr. Hassey that Ladish’s board of directors intended to contact a potential bidder that had indicated an interest in a strategic transaction with Ladish before the board would further pursue a business combination with ATI. Mr. Hassey initially objected and indicated that ATI may choose to cease further negotiations with Ladish. Several days later, Mr. Hassey called Mr. Vroman and told him he would not object to Ladish approaching at that time any person the Ladish board of directors thought appropriate in light of prior contacts and the directors’ fiduciary duties, but that Ladish should make any such approach quickly and talk to ATI after Ladish received a response to any such approach.

 

On September 9, 2010, Mr. Larsen contacted a representative of Bidder X about Bidder X’s interest in making an offer with respect to a business combination with Ladish. Mr. Larsen communicated to Bidder X that time was of the essence and that Bidder X should make its best offer. Ladish did not contact any other potential bidders. Other than ATI and Bidder X, no other potential bidder had made an offer for, or provided a written indication of interest in, Ladish since March 2009.

 

On September 9, 2010, Bidder X and Ladish executed a confidentiality and standstill agreement that was substantially identical to the confidentiality and standstill agreement between ATI and Ladish. During the following week, Bidder X conducted due diligence with respect to Ladish.

 

On September 20, 2010, Bidder X delivered to Ladish a written offer with respect to a proposed strategic combination with Ladish. Bidder X’s offer involved consideration of $40.00 per share of Ladish common stock, with half of the consideration being in cash and half of the consideration consisting of Bidder X’s common stock.

On September 22, 2010, the Ladish board of directors met with representatives of Baird and Foley & Lardner. At the meeting, Mr. Vroman updated the board on Ladish management’s communications with ATI and Bidder X. The board of directors then discussed the relative merits of the current offers from ATI and Bidder X, including the amounts and cash-stock mix of the offers and the perceived better strategic fit, greater opportunities for synergies and lower regulatory risk associated with the ATI offer. While the Ladish board of directors expected that a transaction with ATI would result in purchasing savings, overhead cost reductions and significant vertical integration benefits, which are discussed further under “— Ladish’s Reasons for the Merger; Recommendation of the Ladish Board of Directors” and “— ATI’s Reasons for the Merger,” the Ladish board of directors expected that a transaction with Bidder X would only result in overhead cost reductions for the combined company and not any purchasing savings or any vertical integration or other strategic benefits. The board of directors also considered that Bidder X had made an offer that was essentially equal to the ATI offer in amount even though it had been invited to make a best offer, leading the Ladish board of directors to conclude that Bidder X was not likely to significantly increase its offer. Based on the foregoing and other factors the directors deemed relevant, including the advice of Baird and Foley & Lardner, the Ladish board of directors instructed management to attempt to convince ATI to materially increase its offer to differentiate it from other offers and make it compelling to the Ladish board of directors.

 

On October 5, 2010, Mr. Vroman met with Mr. Hassey in Pittsburgh, Pennsylvania. Mr. Vroman indicated that Ladish had received an offer from a third party with respect to a proposed strategic combination with Ladish.

 

On October 6, 2010, Mr. Hassey and Mr. Vroman spoke by phone. Mr. Hassey proposed that Mr. Vroman ask the Ladish board of directors whether they would view favorably an offer involving merger consideration of $48.00 per share of Ladish common stock, one half of which would be in shares of ATI common stock and one half of which would be in cash. Mr. Hassey explained that he believed such an offer was preemptive and that he would only ask the ATI board of directors to authorize him to make an official offer along those lines if he was confident that it would be viewed favorably by the Ladish board of directors. The proposed consideration represented premiums of 54.9%, 70.9%, 73.0%, 82.0% and 125.5% over the average closing price for Ladish common stock reported for the one-day, 30-day, 90-day, 180-day and one-year periods, respectively, prior to October 6, 2010. Mr. Hassey also indicated that ATI would require Ladish to enter into a customary exclusivity agreement with ATI in connection with such an offer.

 

On October 7, 2010, the Ladish board of directors met again with representatives of Baird and Foley & Lardner to discuss ATI’s potential revised offer discussed on October 6, 2010 and ATI’s related demand for an exclusivity agreement. Based on the significant premium the potential offer represented and the considerations described in “Ladish’s Reasons for the Merger; Recommendation of the Ladish Board of Directors” (other than the terms of the merger agreement, which had not been drafted, and the Baird fairness opinion, which had not been prepared or delivered) and Baird’s preliminary financial analyses that had been presented at prior meetings of the Ladish board of directors, the Ladish board of directors determined that it would authorize Ladish to enter into exclusive negotiations with ATI based on the proposed merger consideration of $48.00 per share of Ladish common stock, one half of which would be in shares of ATI common stock and one half of which would be in cash; provided that ATI would also agree at that time to negotiate (i) the terms of a reasonable “fiduciary out” exception to the restrictions on the ability of Ladish to participate in discussions and negotiations with and furnish confidential information to a third party in connection with an unsolicited alternative takeover proposal to acquire Ladish or its businesses and (ii) the amount of the termination fee that Ladish would have to pay to ATI under certain circumstances, which amount must not be more than 4% of the aggregate merger consideration. Following the meeting, Mr. Vroman informed Mr. Hassey that the Ladish board of directors would view such an offer favorably, subject to the conditions specified by the Ladish board of directors in the proviso to the prior sentence. During that conversation, Messrs. Hassey and Vroman discussed in general terms what a reasonable termination fee might be under the circumstances.

 

ATI’s board of directors considered the status of ATI’s offer to Ladish at a meeting on October 12, 2010. At that meeting, ATI’s board of directors authorized a revised offer to Ladish, which was conveyed to Ladish by a letter from Mr. Hassey to Mr. Vroman dated October 12, 2010. The revised offer involved merger consideration of $48.00 per share of Ladish common stock, one half of which would be in shares of ATI common stock and one half of which would be in cash. Mr. Hassey also called Mr. Vroman on October 12, 2010 to discuss the revised offer. During the

call, Mr. Hassey confirmed that ATI would agree in principal to Ladish’s “fiduciary out” condition, and Messrs. Hassey and Vroman agreed that the termination fee would be 4% of the aggregate merger consideration.

 

Also on October 12, 2010, Mr. Walton provided to Mr. Larsen a draft of an exclusivity agreement. The exclusivity agreement provided, among other things, that Ladish would not solicit any third party proposals for competing transactions, participate in negotiations with third parties regarding such a competing transaction or enter into any agreement regarding such a competing transaction. The exclusivity period set forth in the exclusivity agreement commenced on October 12, 2010 and continued through the earliest of (i) the date, if any, on which ATI notified Ladish that ATI has elected not to proceed with a business combination with Ladish, (ii) the date a definitive agreement between ATI and Ladish was executed and delivered and (iii) November 30, 2010. Ladish and ATI agreed to move forward with the negotiation of a business combination on an exclusive basis and executed the exclusivity agreement on October 12, 2010.

 

On October 15, 2010, Ladish made an electronic data room available to ATI and additional due diligence commenced. In late October 2010 and early November 2010, Messrs. Hassey, Harshman and Walton toured Ladish facilities in Windsor, Connecticut; Irvine, California; Albany, Oregon; Cudahy, Wisconsin; and Stalowa Wola, Poland. Messrs. Vroman and Larsen accompanied Messrs. Hassey, Harshman and Walton on the tours of the domestic facilities.

 

On October 19, 2010, Mr. Walton sent an initial draft of a merger agreement to Mr. Larsen via email. Through Foley & Lardner, comments to the initial merger agreement draft were sent to K&L Gates LLP, ATI’s outside legal counsel, which is referred to as K&L Gates, on October 26, 2010.

 

On October 28, 2010, ATI’s board of directors met and received an update on the status of the proposed business combination with Ladish, including an update on the negotiation of the merger agreement. Prior to the meeting the directors received a packet that included the current draft of the merger agreement, a summary of the agreement and other discussion materials to facilitate their review and consideration of the proposed merger, including financial analyses prepared by ATI’s senior management. During the meeting, Mr. Hassey reviewed ATI’s financial analyses with ATI’s board of directors. Following further discussion and deliberation regarding the proposed merger, ATI’s board of directors authorized ATI’s senior management to proceed with the negotiation of the merger agreement and to execute and deliver the merger agreement if, in the judgment of ATI’s senior management, the merger could be accomplished substantially on the terms discussed by ATI’s board of directors at that meeting.

 

K&L Gates sent a revised draft of the merger agreement to Foley & Lardner on October 29, 2010. On October 30, 2010 and continuing over the next two weeks, representatives of ATI and Ladish, including K&L Gates and Foley & Lardner, continued to communicate regularly regarding due diligence items, negotiate and revise the draft merger agreement and related disclosure schedules and otherwise coordinate regarding relevant transaction matters. Participants in the negotiations concerning terms of the merger agreement were Mr. Walton and Elliot S. Davis, ATI’s Vice President and General Counsel, for ATI, and Mr. Larsen for Ladish, as well as representatives of K&L Gates and Foley & Lardner. Among the terms negotiated were the following:

 

 

 

On November 3, 2010, the Ladish board of directors held a regular meeting, with representatives of Baird and Foley & Lardner attending. At that meeting, management and representatives of Baird reviewed with the board of directors the status of negotiations with ATI, as well as the financial due diligence on ATI being conducted by Baird. Representatives of Baird also discussed with the board of directors Baird’s updated preliminary financial analyses. The board of directors also discussed with representatives of Baird the board’s plans for its special meeting to be held on November 4, 2010.

 

On November 4, 2010, the Ladish board of directors held a special meeting, at which representatives of ATI, including Messrs. Hassey, Harshman, Walton and Dale G. Reid, ATI’s Senior Vice President, Finance and Principal Financial Officer, made a presentation to the Ladish board of directors regarding ATI’s plans for the combined company after the proposed business combination. The presentation summarized ATI’s current operating groups, business units and joint ventures and its manufacturing capabilities and market sectors. Messrs. Hassey, Harshman, Walton and Reid also discussed (i) ATI’s views of the primary potential strategic benefits involved in a business combination of ATI and Ladish, including the enhancement of ATI’s position with aerospace customers, growth opportunities for mill products, improvement of ATI’s competitive position in light of supply chain consolidation and increased profitability, (ii) the proposed terms for a merger transaction, including merger consideration equal to $48.00 per share, one-half of which would be in cash and one-half of which would be in ATI common stock, and (iii) a proposed working timeline to complete the transaction. After the presentation, the Ladish board of directors took the opportunity to ask further questions regarding ATI and its plans for the combined company.

 

On November 6, 2010, Messrs. Larsen, Walton and Davis, as well as representatives of K&L Gates and Foley & Lardner, met by conference call. On the call, they substantially settled most of the remaining open points in the merger agreement, including (i) the details of the “fiduciary out,” providing that Ladish could postpone the special meeting if its board of directors determines in good faith (after considering applicable provisions of state law and after consulting with and receiving the advice of its outside counsel) that the failure to do so would be reasonably likely to constitute a breach of its fiduciary duties to Ladish shareholders under applicable law, (ii) that ATI would have the right to negotiate with Ladish for three business days following Ladish’s receipt of an unsolicited alternative takeover proposal to acquire Ladish or its businesses, (iii) the agreement termination provisions, including Ladish’s right to terminate the merger agreement following its receipt of an unsolicited superior proposal and (iv) the circumstances under which the termination fee would be payable by Ladish to ATI.

 

On November 11, 2010, the Ladish board of directors held a special meeting at which a representative of Foley & Lardner reviewed with the board the details of the merger agreement, which had been distributed, together with draft resolutions and a summary of the covenants regarding the solicitation of competing takeover proposals and the payment of termination fees. Messrs. Vroman and Larsen and the Foley & Lardner representative summarized for the board of directors the current status of negotiations and the additional actions that would need to occur before the merger agreement would be signed.

 

On November 15, 2010, the Ladish board of directors held a special meeting with representatives of Baird and Foley & Lardner in attendance. At that meeting, Mr. Vroman updated the board regarding status of negotiations. A representative of Foley & Lardner reviewed with the board of directors in detail the draft resolutions, which had been circulated to the board the prior week.

 

On November 16, 2010, the Ladish board of directors held a special meeting to consider the proposed business combination, with representatives of Baird and Foley & Lardner attending. The Ladish board of directors was provided in advance of the meeting a substantially final draft of the merger agreement and other materials related to the transaction. At the meeting, Mr. Larsen and representatives of Foley & Lardner reviewed with the board of directors certain legal matters relating to its consideration of the proposed merger and discussed certain material terms of the merger agreement. Baird reviewed its financial analyses of the merger consideration to be received by the holders of Ladish common stock in the proposed merger and delivered its oral opinion to the Ladish board of directors (which was subsequently confirmed in writing by delivery of Baird’s written opinion dated November 16, 2010), to the effect that, as of November 16, 2010 and subject to the assumptions, qualifications and limitations set forth in its written opinion, the merger consideration to be received by the holders of Ladish common stock in the

merger was fair, from a financial point of view, to such holders. Following discussion, the Ladish board of directors, taking into account various factors and potential risks as described further below under “— Ladish’s Reasons for the Merger; Recommendation of the Ladish Board of Directors” and with one director dissenting, determined that the proposed merger agreement and the transactions contemplated by the proposed merger agreement were advisable, fair to and in the best interests of Ladish and its shareholders, and approved and adopted the proposed merger agreement and the transactions contemplated thereby. Mr. Larsen then contacted Mr. Walton to inform him that the Ladish board meeting had concluded and that the board of directors had approved the merger.

 

After the parties finalized the form of, and exchanged the final versions of, the merger agreement and disclosure schedules, the agreement was executed by ATI, LPAD, PADL and Ladish on November 16, 2010, and ATI and Ladish each issued a press release before the opening of trading on November 17, 2010 announcing the merger agreement.

 

Ladish’s Reasons for the Merger; Recommendation of the Ladish Board of Directors

 

Ladish’s board of directors consulted with Ladish’s management, as well as Ladish’s outside legal counsel and financial advisors, in its evaluation of the merger. In reaching its conclusion to approve and adopt the merger agreement and in determining that the merger was advisable and in the best interests of Ladish and its shareholders, the Ladish board of directors considered the potential benefits of the merger and the risks of Ladish remaining as a stand-alone company, including the following material factors, each of which the Ladish board of directors believed supported its decision:

 

 

 

 

 

 

 

The Ladish board of directors also considered a variety of risks and other potentially negative factors concerning the merger and the merger agreement, including the following:

 

 

The foregoing discussion of the information and factors considered by the Ladish board of directors is not exhaustive, but includes the material factors considered by the Ladish board of directors. In view of the wide variety of factors considered by the Ladish board of directors in connection with its evaluation of the merger and the complexity of these matters, the Ladish board of directors did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. The Ladish board of directors evaluated the factors described above and reached consensus that the merger was advisable and in the best interests of Ladish and Ladish’s shareholders. In considering the factors described above, individual members of the Ladish board of directors may have given different weights to different factors.

 

The Ladish board of directors, with one director dissenting, determined that the merger, the merger agreement and the other transactions contemplated by the merger agreement are advisable and in the best interests of Ladish and its shareholders. Accordingly, the Ladish board of directors, with one director dissenting, approved the merger and approved and adopted the merger agreement and recommends that Ladish shareholders vote “FOR” the proposal to adopt the merger agreement.

 

John W. Splude, the Ladish director who dissented from the Ladish board of directors’ decision, stated at the time of his dissent that he supported the merger. However, he dissented because he believed that the restrictions in the merger agreement on the ability of Ladish to participate in discussions and negotiations with and furnish confidential information to a third party in connection with any inquiries or proposals from any third party that constitute, or may reasonably be expected to lead to, a takeover proposal to acquire Ladish or its businesses should not be in a merger agreement involving a company that has not conducted a full auction and that these provisions might limit a third party’s ability to negotiate a competing business combination transaction with Ladish.

 

Opinion of Ladish’s Financial Advisor — Robert W. Baird & Co. Incorporated

 

Ladish’s board of directors retained Baird in connection with the merger and to render an opinion as to the fairness, from a financial point of view, to the holders of the common stock of Ladish, other than ATI and its

affiliates, of the merger consideration to be received by the holders of Ladish common stock (other than ATI and its affiliates) in the merger.

 

On November 16, 2010, Baird rendered its oral opinion (which was subsequently confirmed in writing) to Ladish’s board of directors to the effect that, subject to the contents of such opinion, including the various assumptions and limitations set forth therein, as of such date, the merger consideration to be received by the holders of Ladish common stock (other than ATI and its affiliates) was fair, from a financial point of view, to the holders of the Ladish common stock (other than ATI and its affiliates).

 

As a matter of policy, Baird’s opinion was approved by a fairness committee, a majority of the members of which were not involved in providing financial advisory services on behalf of Baird to Ladish in connection with the merger.

 

The full text of Baird’s written opinion, dated November 16, 2010, which sets forth the assumptions made, general procedures followed, matters considered and limitations on the scope of review undertaken by Baird in rendering its opinion, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. Baird’s opinion was directed only to the fairness, as of the date of the opinion and from a financial point of view, to the holders of Ladish common stock (other than ATI and its affiliates) of the merger consideration and did not constitute a recommendation to any shareholder as to how such shareholder should vote with respect to the merger. Baird expressed no opinion about the fairness of the amount or nature of the compensation or consideration to any of Ladish’s creditors, officers, directors or employees, or any class of such persons, relative to the merger consideration to be received by Ladish’s shareholders. The summary of Baird’s opinion set forth below is qualified in its entirety by reference to the full text of such opinion attached as Annex B to this proxy statement/prospectus. You are urged to read the opinion carefully in its entirety.

 

In conducting its investigation and analyses and in arriving at its opinion, Baird reviewed such information and took into account such financial and economic factors, investment banking procedures and considerations as it deemed relevant under the circumstances. In that connection, and subject to the various assumptions, qualifications and limitations set forth in its opinion, Baird, among other things:

 

(i) reviewed certain internal information, primarily financial in nature, including financial forecasts concerning the business and operations of Ladish as prepared and furnished to Baird for purposes of its analysis by Ladish’s management (referred to herein as the Forecasts) as well as the contemplated synergies associated with the merger as prepared and furnished to Baird for purposes of its analysis by Ladish’s management (referred to herein as the Expected Synergies);

 

(ii) reviewed certain publicly available information, including, but not limited to Ladish’s and ATI’s recent filings with the SEC and equity analyst research reports covering Ladish and ATI prepared by various investment banking firms;

 

(iii) reviewed the principal financial terms of the merger agreement, as they related to Baird’s analysis;

 

(iv) compared the financial position and operating results of Ladish and ATI with those of certain other publicly traded companies Baird deemed relevant;

 

(v) compared the historical market prices, trading activity and market trading multiples of Ladish common stock and ATI common stock with those of certain other publicly traded companies Baird deemed relevant;

 

(vi) compared the proposed valuation multiples implied in the merger with the implied enterprise value multiples of certain other business combinations Baird deemed relevant;

 

(vii) considered the present values of the forecasted cash flows of Ladish reflected in the Forecasts; and

 

(viii) reviewed certain potential pro forma financial effects of the merger furnished to Baird, and prepared, by Ladish’s management.

 

Baird held discussions with members of Ladish’s and ATI’s respective senior managements concerning Ladish’s and ATI’s historical and current financial condition and operating results, as well as the future prospects of

Ladish and ATI. In connection with its engagement, Baird evaluated potential interest from other parties and contacted one party (Bidder X), other than ATI, as directed by Ladish’s board of directors. Baird also considered such other information, financial studies, analyses and investigations and financial, economic and market criteria which it deemed relevant for the preparation of its opinion.

 

In arriving at its opinion, Baird assumed and relied upon, without independent verification, the accuracy and completeness of all of the financial and other information that was publicly available or provided by Ladish or on Ladish’s behalf. Baird did not independently verify any information supplied to it by Ladish concerning the parties to the merger that formed a substantial basis for its opinion. Baird was not engaged to independently verify, did not assume any responsibility to verify, assumed no liability for, and expressed no opinion on, any such information, and Baird assumed, without independent verification, that Ladish was not aware of any information prepared by it or its advisors that might be material to Baird’s opinion that has not been provided to Baird. Baird assumed, without independent verification, that:

 

(i) all material assets and liabilities (contingent or otherwise, known or unknown) of Ladish and ATI were as set forth in their respective financial statements provided to Baird or that were publicly available;

 

(ii) the financial statements of Ladish and ATI provided to Baird or that were publicly available presented fairly the results of operations, cash flows and financial condition of Ladish and ATI, respectively, for the periods, and as of the dates, indicated and were prepared in conformity with U.S. generally accepted accounting principles consistently applied;

 

(iii) the Forecasts and the Expected Synergies were reasonably prepared on bases reflecting the best available estimates and good faith judgments of Ladish’s senior management as to the future performance of Ladish, and Baird relied, without independent verification, upon such Forecasts and Expected Synergies in the preparation of its opinion, and Baird assumed, without independent verification, that the Forecasts and the Expected Synergies currently contemplated by Ladish’s management used in its analysis would be realized in the amounts and on the time schedule contemplated;

 

(iv) in all respects material to Baird’s analysis, the merger would be consummated in accordance with the material terms and conditions of the merger agreement without any material amendment thereto and without waiver by any party of any of the material conditions to their respective obligations thereunder;

 

(v) in all respects material to Baird’s analysis, the representations and warranties contained in the merger agreement were true and correct and that each party would perform all of the material covenants and agreements required to be performed by it under the merger agreement;

 

(vi) all material corporate, governmental, regulatory or other consents and approvals (contractual or otherwise) required to consummate the merger had been, or would be, obtained without the need for any material changes to the merger consideration or other material financial terms or conditions of the merger or that would otherwise materially affect Ladish or ATI or Baird’s analysis; and

 

(vii) the merger would be treated as a tax-free reorganization for federal income tax purposes.

 

Baird relied, without independent verification, as to all legal matters regarding the merger on the advice of legal counsel to Ladish.

 

In conducting its review, Baird did not undertake or obtain an independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise, known or unknown) or solvency of Ladish or ATI nor did Baird make a physical inspection of the properties or facilities of Ladish or ATI. Baird did not consider any expenses or potential adjustments to the merger consideration relating to the merger as part of its analysis. In each case above, Baird made the assumptions and took the actions or inactions described above with Ladish’s board of directors’ knowledge and consent. In reaching its conclusions, Baird did not perform a discounted cash flow analysis of ATI because the estimates in publicly available equity analyst research reports for ATI were either incomplete or did not extend over a sufficiently long period of time. ATI did not provide Baird with financial forecasts concerning the business and operations of ATI. With respect to the publicly available research analyst estimates for ATI referred to above, with Ladish’s board of directors’ consent, Baird reviewed and discussed such estimates with the management of ATI. With respect to such estimates for the fourth quarter of 2010, Baird noted the broad earnings per share range, and with respect to such estimates for 2011 and 2012, Baird was informed by such management that such estimates

represent reasonable estimates and judgments of the future financial results and conditions of ATI, and in each case, Baird expressed no opinion with respect to such estimates or the assumptions on which they are based.

 

Baird’s opinion necessarily was based upon economic, monetary and market conditions as they existed and could be evaluated on the date of its opinion, and its opinion did not predict or take into account any changes which may occur, or information which may become available, after the date of its opinion. Furthermore, Baird expressed no opinion as to the prices or trading ranges at which any of Ladish’s or ATI’s securities (including Ladish common stock and ATI common stock) would trade following the date of its opinion or as to the effect of the merger on such prices or trading range, or any earnings or ownership dilutive impact that may result from ATI’s issuance of additional ATI common stock as part of the merger consideration. Such prices and trading ranges may be affected by a number of factors, including but not limited to (i) dispositions of Ladish common stock and ATI common stock by shareholders within a short period of time after, or other market effects resulting from, the announcement and/or effective date of the merger; (ii) changes in prevailing interest rates and other factors which generally influence the price of securities; (iii) adverse changes in the current capital markets; (iv) the occurrence of adverse changes in the financial condition, business, assets, results of operations or prospects of Ladish or ATI or in Ladish’s or ATI’s industries; (v) any necessary actions by, or restrictions of, federal, state or other governmental agencies or regulatory authorities; and (vi) timely completion of the merger on terms and conditions that are acceptable to all parties at interest.

 

Baird’s opinion was prepared at the request and for the internal and confidential information of Ladish’s board of directors, and it is Baird’s belief that its opinion may not be relied upon, used for any other purpose or disclosed to any other party without its prior written consent. Baird’s opinion should not be construed as having created any fiduciary duty on Baird’s part to any party. Because Baird’s opinion was solely provided to Ladish’s board of directors, it is Baird’s belief that shareholders cannot rely upon its opinion to support any claims against Baird arising under applicable state law. Baird is unaware of any applicable state law authority regarding the availability of such a potential defense, and the availability of such a defense would have to be resolved by a court of competent jurisdiction. However, such a defense would have no effect on the rights and responsibilities of the Ladish board of directors under applicable state law. Further, such a state law defense would have no effect on the rights and responsibilities of either Baird or the Ladish board of directors under the federal securities laws.

 

Baird’s opinion is related only to the merger consideration to be received by Ladish shareholders and is not intended to be relied upon when evaluating other aspects of the merger. In particular, other than with respect to the merger consideration to be received by Ladish shareholders, Baird’s opinion did not address the relative merits or risks of: (i) the merger, the merger agreement or any other agreements or other matters provided for, or contemplated by, the merger agreement; (ii) any other transactions that may be, or might have been, available as an alternative to the merger; or (iii) the merger compared to any other potential alternative transactions or business strategies considered by Ladish’s board of directors and, accordingly, Baird relied upon its discussions with the senior management of Ladish with respect to the availability and consequences of any alternatives to the merger.

 

The following is a summary of the material financial analyses performed by Baird in connection with rendering its opinion, which is qualified in its entirety by reference to the full text of such opinion attached as Annex B and to the other disclosures contained in this section. The order of analyses described does not represent relative importance or weight given to the analyses performed by Baird. Some of the summaries of the financial analyses include information presented in a tabular format. These tables must be read together with the full text of each summary and alone are not a complete description of Baird’s financial analyses. Except as otherwise noted, the following quantitative information is based on market and financial data as it existed on or before November 16, 2010 and is not necessarily indicative of current market conditions.

 

Valuation of Ladish

 

Implied Valuation, Transaction Multiples and Transaction Premiums.  Based on the cash consideration of $24.00 net per share of Ladish common stock (such cash amount is referred to herein as the Cash Consideration) and a fraction of a share of ATI common stock worth $24.00 at the time of the signing of the merger agreement based upon a fixed exchange ratio (such number of shares is referred to herein as the Stock Consideration and, together with the Cash Consideration, as the Per Share Equity Purchase Price), Baird calculated the implied “equity purchase price” (defined as the Per Share Equity Purchase Price multiplied by the total number of diluted common shares

outstanding of Ladish, including gross shares issuable upon the exercise of stock options, less assumed option proceeds) to be $765 million. In addition, Baird calculated the implied “total purchase price” (defined as the equity purchase price plus the book value of Ladish’s total debt, preferred stock and minority interests, less cash, cash equivalents and marketable securities) to be $836 million.

 

Baird calculated valuation multiples of (i) earnings before interest, taxes, depreciation and amortization (“EBITDA”), (ii) earnings before interest and taxes (“EBIT”) and (iii) earnings per share (“EPS”). For Ladish, these multiples were calculated for both Ladish’s November 16, 2010 closing share price of $29.33 and for the offer price of $48.00 per share, and were based on management’s financial projections for Ladish provided by Ladish management and set forth below under “— Certain Projected Financial Information.” The valuation multiples for ATI were based on equity research analysts’ financial projections for ATI and were calculated as of November 16, 2010.

 

 

 

 

Note: Enterprise values exclude pension liabilities and postretirement benefit liabilities.

 

 

Baird reviewed the historical price and trading activity of Ladish common stock and noted that the high, low and average closing prices for Ladish common stock were $33.48, $13.25 and $23.31, respectively, over the last twelve months and $46.07, $5.36 and $21.65, respectively, over the last three years. Baird also noted that Ladish common stock price rose 117.4% over the last twelve months and declined 27.6% over the last three years.

Baird also calculated the premiums that the Per Share Equity Purchase Price represented over the closing market price of Ladish common stock for various time periods ranging from one day to one year prior to November 17, 2010. These premiums are summarized in the table below.

 

 

 

Note: LTM refers to the Latest Twelve Month Period ended November 16, 2010.

 

Selected Publicly Traded Company Analysis.  Baird reviewed certain publicly available financial information and stock market information for certain publicly traded companies that Baird deemed relevant. The group of selected publicly traded companies reviewed is listed below.

 

 

Baird chose these companies based on a review of publicly traded companies that possessed general business, operating and financial characteristics representative of companies in the industry in which Ladish operates. In particular, the selected publicly traded companies produce specialty metals and/or serve the aerospace and general industrial market segments. Baird included all companies that were relevant from a product or end market perspective and did not use financial criteria to exclude any relevant company. However, Baird adjusted the mean and median multiples of the group to exclude all EBITDA multiples greater than 20x, EBIT multiples greater than 25x and P/E multiples greater than 40x as these multiples were deemed by Baird to be outliers. Baird noted that none of the companies reviewed is identical to Ladish and that, accordingly, the analysis of such companies necessarily involves complex considerations and judgments concerning differences in the business, operating and financial characteristics of each of the companies and other factors that affect the public market values of such companies.

 

For each company, Baird calculated the “equity market value” (defined as the market price per share of each company’s common stock multiplied by the total number of diluted common shares outstanding of such company, including net shares issuable upon the exercise of stock options). In addition, Baird calculated the “total market value” (defined as the equity market value plus the book value of each company’s total debt, preferred stock and minority interests, less cash, cash equivalents and marketable securities). Baird calculated the multiples of each company’s total market value to its estimated 2010, projected 2011 and projected 2012 EBITDA and EBIT. Baird also calculated multiples of each company’s price per share to projected 2010, projected 2011 and projected 2012

diluted earnings per share. Baird then compared the transaction multiples implied in the merger with the corresponding trading multiples for the selected companies. Stock market and historical financial information for the selected companies was based on publicly available information as of November 16, 2010, and projected financial information was based on publicly available research reports as of such date. A summary of the implied multiples is provided in the table below.

 

 

In addition, Baird calculated the implied per share equity values of Ladish common stock based on the trading multiples of the selected public companies and compared such values to the Per Share Equity Purchase Price of $48.00 per share. The implied per share equity values, based on the multiples that Baird deemed relevant, are summarized in the table below.

 

 

Baird compared the implied per share equity values in the table above with the Per Share Equity Purchase Price implied in the merger in concluding that the merger consideration was fair to Ladish from a financial point of view.

Selected Acquisition Analysis.  Baird reviewed certain publicly available financial information concerning completed or pending acquisition transactions that Baird deemed relevant. The group of selected acquisition transactions is listed below.

 

 

Baird chose these acquisition transactions based on a review of completed and pending acquisition transactions involving target companies that possessed general business, operating and financial characteristics representative of companies in the industry in which Ladish operates. In particular, the selected acquisition transactions include targets that produced specialty metals and/or served the aerospace and general industrial market segments. Baird noted that none of the acquisition transactions or subject target companies reviewed is identical to the merger or Ladish, respectively, and that, accordingly, the analysis of such acquisition transactions necessarily involves complex considerations and judgments concerning differences in the business, operating and financial characteristics of each subject target company and each acquisition transaction and other factors that affect the values implied in such acquisition transactions. Baird excluded the following acquisition transactions from its materials due to the absence of public data which could be independently verified: Precision Castparts/Carlton Forge, ATI/Crucible Compaction Metals, Ladish/Chen-Tech Industries and Precision Castparts/McWilliams Forge Company.

 

For each transaction, Baird calculated the implied “total purchase price” (defined as the equity purchase price plus the book value of each target company’s total debt, preferred stock and minority interests, less cash, cash equivalents and marketable securities). Baird calculated the multiples of Ladish’s and each selected target company’s implied total purchase price to its LTM revenues and EBITDA. A summary of the implied multiples is provided in the table below.

 

 

In addition, Baird calculated the implied per share equity values of Ladish common stock based on the acquisition transaction multiples of the selected acquisition transactions. The implied per share equity values, based on the multiples that Baird deemed relevant, are summarized in the table below.

 

 

Baird compared the implied per share equity values in the table above with the Per Share Equity Purchase Price implied in the merger in concluding that the merger consideration was fair to Ladish from a financial point of view.

 

Discounted Cash Flow Analysis.  Baird performed a discounted cash flow analysis utilizing Ladish’s projected unlevered free cash flows (defined as net income excluding after-tax net interest, plus depreciation and amortization, less capital expenditures and increases in net working capital, plus/minus changes in other operating and investing cash flows) from 2011 to 2015, as provided by Ladish’s senior management. The following

presents the unlevered free cash flows for Ladish, based on Ladish management’s financial projections for Ladish, used in Baird’s discounted cash flow analysis.

 

 

In such analysis, Baird calculated the present values of the unlevered free cash flows from 2011 to 2015 by discounting such amounts at rates ranging from 13% to 17%. Baird calculated the present values of the free cash flows beyond 2015 by assuming terminal values ranging from 7.5x to 9.5x forward EBITDA and discounting the resulting terminal values at discount rates, based on a weighted average cost of capital calculation, ranging from 13% to 17%. The summation of the present values of the unlevered free cash flows and the present values of the terminal values produced equity values ranging from $26.26 to $39.08 per share, as compared to the Per Share Equity Purchase Price of $48.00 per share. Baird compared these implied per share equity values with the Per Share Equity Purchase Price implied in the merger in concluding that the merger consideration was fair to Ladish from a financial point of view.

 

Valuation of ATI

 

Stock Price, Trading Activity and Public Equity Research.  In order to assess the relative public market valuation of ATI common stock to be used as consideration in the merger, Baird reviewed the historical stock prices, historical trading activity and public equity research of ATI. In considering the historical price and trading activity of ATI common stock, Baird noted that the high, low and average closing prices for ATI common stock were $57.52, $33.84 and $47.31, respectively over the last twelve months and $97.75, $15.24 and $46.20, respectively, over the last three years. Baird also noted that ATI common stock price rose 42.8% over the last twelve months and declined 44.8% over the last three years. Baird also reviewed publicly available equity research covering ATI and Baird noted that five research analysts had “outperform” or similar ratings on ATI’s stock, four research analysts had “neutral” or similar ratings on ATI’s stock and one research analyst had “underperform” or similar ratings on ATI’s stock.

 

Selected Publicly Traded Company Analysis.  In order to assess the relative public market valuation of the ATI common stock to be used as consideration in the merger, Baird reviewed certain publicly available financial information for certain publicly traded companies that Baird deemed relevant. The group of selected publicly traded companies reviewed is listed below.

 

 

Baird chose these companies based on a review of publicly traded companies that possessed general business, operating and financial characteristics representative of companies in the industry in which ATI operates. In particular, the selected publicly traded companies participate in the manufacturing and production of specialty metals, including an assortment of high performance specialty alloys and steels, and typically serve industrial markets, including aerospace and defense, automotive, oil and gas and general industrial. Baird included all companies that were relevant from a product or end market perspective and did not use financial criteria to exclude any relevant company. However, Baird adjusted the mean and median multiples of the group to exclude all EBITDA multiples greater than 20x, EBIT multiples greater than 25x and P/E multiples greater than 40x as these multiples were deemed by Baird to be outliers. Baird noted that none of the companies reviewed is identical to ATI and that, accordingly, the analysis of such companies necessarily involves complex considerations and judgments

concerning differences in the business, operating and financial characteristics of each company and other factors that affect the public market values of such companies.

 

For each company, Baird calculated the “equity market value” (defined as the market price per share of each company’s common stock multiplied by the total number of diluted common shares outstanding of such company, including net shares issuable upon the exercise of stock options). In addition, Baird calculated the “total market value” (defined as the equity market value plus the book value of each company’s total debt, preferred stock and minority interests, less cash, cash equivalents and marketable securities). Baird calculated the multiples of each company’s total market value to its projected 2010, projected 2011 and projected 2012 EBITDA and EBIT. Baird also calculated multiples of each company’s price per share to projected 2010, projected 2011 and projected 2012 diluted earnings per share. Baird then compared ATI’s implied multiples with the corresponding trading multiples for the selected companies. Stock market and historical financial information for the selected companies was based on publicly available information as of November 16, 2010, and projected financial information was based on publicly available research reports as of such date. A summary of the implied multiples is provided in the table below.

 

 

 

 

In addition, Baird calculated the implied per share equity values of ATI common stock based on the trading multiples of the selected public companies. The implied per share equity values, based on the multiples that Baird deemed relevant, are summarized in the table below. The selected valuation multiples included the low, median, mean and high multiples by year for the selected publicly traded companies. EBITDA multiples and Price-to- Earnings multiples of greater than 20x and 40x, respectively, were excluded from Baird’s analysis.