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TransDigm to acquire Esterline for USD 4bn
Posted on Thursday, 11 October 2018 10:42
TransDigm has reached an agreement to acquire jet components manufacturer Esterline Technologies for USD 4.00 billion, including debt.
Under the terms of the agreement, the acquiror is offering USD 122.50 per share in cash, representing a premium of 38.0 per cent to the target’s close of USD 88.79 on 9th October, the last trading day prior to the announcement.
Esterline’s stock price jumped 30.0 per cent following the news to USD 115.41 yesterday.
TransDigm, best known for its commercial and military aircraft parts, is expecting the addition of its Washington-headquartered peer to expand its platform of proprietary and sole source content for the aerospace and defence industries.
The buyer, which manufactures ignition systems, specialised pumps and valves, power conditioning devices and cockpit security components, among other items, is financing the transaction using USD 2.00 billion of existing cash on hand and the incurrence of new term loans.
Closing is slated for the second half of 2019 and remains subject to shareholder and regulatory approvals.
Esterline is billed as an industry leader in specialised manufacturing for the aerospace and defence industry with expected 2018 revenues of USD 2.00 billion.
The group, which has 12,500 employees across 50 locations worldwide, is said to consist of 28 business units across eight platforms to best deliver its products.
In the nine months ended 29th June 2018, Esterline generated net sales of USD 1.50 billion, an 2.0 per cent increase on USD 1.47 billion in the corresponding period of 2017.
Earnings from operations before income taxes declined 22.6 per cent to USD 86.50 million in the first three quarters of fiscal 2018 from USD 111.72 million in Q1-Q3 2017.
According to Zephyr, the M&A database published by Bureau van Dijk, there have been 190 deals targeting the aerospace product and parts manufacturing industry announced in 2018 to date.
The largest of these involved Melrose Industries buying GKN, a UK-based aircraft engineering service provider for GBP 8.06 billion.
France’s Safran, Russia’s Obyedinennaya Aviastroitelnaya Korporatsiya and US-headquartered MRA Systems, among others, have also been targeted this year.
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