Kennametal to acquire Federal Signal Corporation's cutting tool business

Jan. 3, 2007

Kennametal Inc. of Latrobe, Pa., ( announced Jan. 3 that it signed an agreement with Federal Signal Corporation to purchase the Federal Signal Corp.’s cutting tool business that includes the Manchester Tool Company, ClappDiCO Corp. and On Time Machine, Inc. for approximately $67 million.

The purchase is expected to close in late January or early February 2007 and remains subject to regulatory approvals and negotiated conditions of closing. Kennametal said it expects the acquisition to be accretive to its earnings within the next twelve months.

Kennametal said the acquisition is consistent with its growth strategy and with its previously stated intentions for the use of cash. It also said the planning for the acquisition, being in one of its core businesses, was conducted within its Kennametal Value Business System, a management operating system the company has in place.

The Federal Signal Corporation's cutting tool businesses have annual sales of approximately $40 million. They produce, market and service super hard polycrystalline diamond and cubic boron nitride cutting tools, tool holding systems and specialized turning tools that Kennametal said are complementary to its product range.

"We are pleased to add yet another component to our metalworking business that will better enable us to serve our customers globally," said Ron Keating, Corporate Vice President and President Metalworking Solutions and Services Group. "These technologies are an exciting addition to our current metalcutting capabilities and will provide additional opportunities for us to serve rapidly growing industry segments such as aerospace, energy and die and mold," he continued. "This bolt-on acquisition helps us to further round out our portfolio in high value niche segments, expanding our existing product lines and our reach into new markets."

Kennametal Inc. (NYSE: KMT) is a leading global supplier of tooling, engineered components and advanced materials consumed in production processes. The company improves customers' competitiveness by providing superior economic returns through the delivery of application knowledge and advanced technology to master the toughest of materials application demands. Companies producing everything from airframes to coal, from medical implants to oil wells and from turbochargers to motorcycle parts recognize Kennametal for extraordinary contributions to their value chains. Customers buy over $2.3 billion annually of Kennametal products and services - delivered by our approximately 13,500 talented employees in over 60 countries - with almost 50 percent of these revenues coming from outside the United States.

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