Alcoa said the transaction has an enterprise value $1.5 billion, or the equivalent of $41 per share, in an all-stock transaction that includes $330 million of RTI cash on hand and up to $517 million in RTI's convertible notes.
The news sent RTI stock up more than 46 percent in pre-market trading.
New York-based Alcoa said around 80 percent of RTI's business is in aerospace and defense contracts.
"This builds out our value-added business in a very attractive market—aerospace," Alcoa chief executive Klaus Kleinfeld said in an interview, who added that titanium is the fastest-growing metal used in aerospace production.
"Basically, we've become a titan in titanium," he said.
Pittsburgh-based RTI, whose customers include Boeing reported annual revenue of $794 million in 2014, and said it expected revenue of $850 million in 2015. Alcoa said it expected RTI's sales to reach $1.2 billion by 2019, an increase of 50 percent versus RTI's 2004 revenue.
Alcoa projects a compounded annual global aerospace market growth rate of 5 to 6 percent through 2019.