Rockwell Collins to buy B/E Aerospace

The aircraft component maker Rockwell Collins has struck a deal to buy an aircraft interior maker, B/E Aerospace, for $62 a share in cash and stock, the companies said on Sunday. Rockwell Collins has a facility located in Bellevue, Iowa.

The acquisition, valued at $6.4 billion plus the assumption of $1.9 billion in debt, expands the range of products that Rockwell Collins supplies to major commercial and business aircraft and broadens its customer base internationally.

The combination is expected to produce cost savings of about $160 million and provide a double-digit lift to per-share earnings in the first full year, the companies said.

Rockwell agreed to pay $34.10 a share in cash and $27.90 in shares of Rockwell Collins stock, a 22.5 percent premium to B/E Aerospace’s closing price on Friday.

The companies have little product overlap. Rockwell is best known for avionics, flight control systems and cabin connectivity, while B/E Aerospace is a major provider of aircraft seats, galleys, lighting and other related systems.

Rockwell, based in Cedar Rapids, Iowa, has a market value of about $11 billion, more than twice that of B/E Aerospace, at $5.1 billion.

B/E Aerospace, based in Wellington, Fla., brings more aftermarket and aircraft retrofit business to Rockwell, which focuses mainly on new equipment, and also adds exposure to twin-aisle aircraft, said Richard Aboulafia, an aerospace analyst at the Teal Group.

Pricing pressures from Boeing and Airbus are a driver of such a deal. “But it’s also a pretty clear indicator that the market has peaked in terms of deliveries and orders,” Mr. Aboulafia said of new aircraft sales. “In this environment, consolidation is inevitable as a cost-control move.” (full article...)

Originally posted October 23, 2016 by Reuters