CLEVELAND—TransDigm Group Inc. is buying Esterline Technologies for about $4 billion, including the assumption of debt.
In an Oct. 10 news release, TransDigm, a producer, designer and supplier of aerospace components and systems for commercial and military aircraft, said it will pay about $122.50 per share in cash for Esterline's stock outstanding. That represents a 38 percent premium to Esterline's closing price of $88.79 per share on Oct. 9.
Directors of both companies have approved the deal, which is expected to be completed during the second half of next year. TransDigm said it expects the acquisition "to be financed primarily through cash on hand and the incurrence of new term loans." The deal should be "modestly accretive to TransDigm's adjusted earnings per share within the first year of ownership," according to the release.
Bellevue, Wash.-based Esterline makes equipment for commercial jetliners, business jets and military aircraft. Its anticipated fiscal year 2018 revenue is about $2 billion, TransDigm said. Esterline has more than 12,500 employees at more than 50 locations worldwide, operating within 28 business units.
Esterline "has attractive platform positions in both the OEM and aftermarket and has substantial content on many important commercial aircraft variants, many regional and business jet aircraft and major defense platforms," TransDigm said.
"We are pleased to have reached agreement to acquire a collection of businesses that fit well with our focused and consistent strategy," W. Nicholas Howley, TransDigm's executive chairman, said in a statement. "Esterline's core aerospace and defense business consists of primarily proprietary, sole source products with significant and growing aftermarket exposure. We view this as highly complementary to our existing business. We are confident that the combination of Esterline's leading positions and our proven track record of driving performance will enable us to deliver the private equity-like returns our investors have come to expect from this investment."
TransDigm president and CEO Kevin Stein said that upon completion of the acquisition, Bob Henderson, TransDigm's current vice chairman, "will oversee the integration and operations of Esterline."
The deal "delivers a compelling value for our shareholders," Curtis Reusser, chairman, president and CEO of Esterline, said in a statement. "I am pleased with the outcome of our thoughtful strategic review process, and we believe it is the best result for all Esterline stakeholders."