TransDigm Acquires AmSafe - Analyst Blog
February 17 2012 - 1:30PM
Zacks
TransDigmGroup Incorporated (TDG)
now includes AmSafe Global Holdings Inc. with the completion of the
acquisition of this leading supplier of innovative, highly
engineered and proprietary safety and restraint equipment used
mainly in the global aerospace industry. The acquisition worth
approximately $750 million was made on a cash free,
debt free basis from a group controlled by Berkshire Partners LLC
and Greenbriar Equity Group LLC. Initially, the acquisition was
announced on January 20, 2012.
Popular for its proprietary
aviation passenger seatbelts and airbags, AmSafe generated revenues
of about $260 million in 2011. More than 90% of the aircraft
worldwide are using AmSafe’s products. Further, Amsafe is the only
company to have a seatbelt airbag system installed worldwide on
both commercial transport and general aviation aircraft. The
company also makes different type of cargo and restraint
products.
TransDigm competes on the basis of
engineering, manufacturing and marketing of high quality products
that meet or exceed the performance and maintenance requirements of
customers through consistent and timely delivery along with
superior customer service and support. The industry’s stringent
regulatory certification and technical requirements with huge
investment necessary for the development and certification of
products, create barriers to entry for potential new competitors.
As long as customers receive products that meet or exceed
expectations and maintain performance standards, they will have a
reduced incentive to certify another supplier due to the cost and
time of the technical design and testing certification processes.
In addition, concerns regarding safety and flight delays, if
products are unavailable or not dependable, are reasons for its
customers to continue their long-term supplier relationships.
TransDigm Group’s business is
sensitive to the number of flight hours that its customers’ planes
spend aloft, the size and age of the worldwide aircraft fleet and
customers’ profitability. These items are, in turn, affected by
general economic conditions. Further, the military and defense
market is significantly dependent upon government budget trends,
particularly the DOD budget. In addition to normal business risks,
its supply of products to the United States Government is subject
to unique risks largely beyond its control. Major competitors of
the company are Goodrich Corp. (GR),
Honeywell International Inc. (HON) and
United Technologies Corp. (UTX).
Based in Cleveland, Ohio,
TransDigm Group Inc.designs, produces, and supplies engineered
aircraft components for use on commercial and military aircraft.
The company operates principally in the US.
We maintain a Zacks #2 Rank
(short-term Buy recommendation) on TransDigm.
GOODRICH CORP (GR): Free Stock Analysis Report
HONEYWELL INTL (HON): Free Stock Analysis Report
TRANSDIGM GROUP (TDG): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis Report
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