Rockwell broadens its reach with $6.4 billion purchase of B/E Aerospace

Sun Oct 23, 2016 6:17pm EDT
 
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By Alwyn Scott

(Reuters) - After two years of looking to expand, aircraft component maker Rockwell Collins Inc has struck a deal to buy aircraft interior maker B/E Aerospace Inc for $62 a share in cash and stock, the companies said on Sunday.

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

Rockwell on Sunday also reported a 14 percent increase in profit to $1.58 a share in its fiscal fourth quarter ended Sept. 30, on a 4 percent rise in sales.

The acquisition, which is expected to be completed next spring, allows both companies to sell to each other’s customers and to deploy Rockwell’s capability with onboard connectivity to make internet-enabled seats, galleys, lavatories and other cabin systems that B/E Aerospace provides.

“B/E is very strong in relationships with airlines,” Rockwell Chief Executive Officer Kelly Ortberg said in an interview. “We're stronger with aircraft makers as well as business aviation operators and the military. We’ll be able to sell our respective products into a much broader market base than either of us could do independently.”

B/E Aerospace plans to use Rockwell’s dealer network and relationships with business jet owners, for example, to know when jets are coming in for avionics upgrades.

“Having that information and time to market directly to the owners of the aircraft is a tremendous opportunity that we're looking to take advantage of,” said Amin Khoury, B/E Aerospace founder and chairman. “It's not something we can do on our own.”

The combination is expected to produce cost savings of about $160 million, with 90 percent captured in the first full year of the acquisition, and provide a double-digit percentage boost to per-share earnings in the first full year, the companies said. They also anticipate it generating more than $6 billion in free cash flow over five years.   Continued...

 
Cockpit equipment made by Rockwell Collins and used in a CH-47 Chinook helicopter is pictured at the ILA Berlin Air Show in Schoenefeld, south of Berlin, Germany, June 1, 2016.    REUTERS/Fabrizio Bensch