Stanley Black & Decker To Buy MAX Supplier -- WSJ
January 30 2020 - 3:02AM
Dow Jones News
By Robert Barba
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 30, 2020).
Stanley Black & Decker Inc. agreed to buy Consolidated
Aerospace Manufacturing LLC for as much as $1.5 billion, with at
least part of the consideration contingent upon the Boeing 737 MAX
returning to service.
Stanley said $200 million of the purchase price for the
specialty-fasteners manufacturer will be held back and is
contingent on the Federal Aviation Administration allowing the MAX
to return to service and Boeing Co. achieving certain production
levels.
Regulators around the world grounded the MAX last year following
two crashes of the plane that resulted in the death of 346
people.
Bankers said the MAX crisis had stalled the frenetic pace of
deal making among companies supplying Boeing and Airbus SE, which
have a combined backlog of around 13,000 jetliners. With MAX
production halted, valuation has become tougher, and many firms are
pivoting toward more work for Airbus and military products to
dilute their exposure to Boeing.
However, continuing industry consolidation also helps Boeing by
creating stronger suppliers better able to withstand the halt in
MAX output, said Chris Higgins, a principal at consultant Avascent
who advises on aerospace M&A.
The effects of the grounding have rippled through several
suppliers. Spirit AeroSystems Holdings Inc., one of the biggest
suppliers for the MAX, said earlier this month it was planning to
lay off 2,800 staffers given the uncertainty of MAX production.
Arconic Inc. said earlier this week it expected to lose $400
million in sales and could cut jobs this year as a result of the
halted production.
Consolidated Aerospace, which also makes components for the
defense markets, had roughly $375 million in revenue in the last
year. Stanley on Wednesday reported 2019 revenue of $14.44 billion,
with earnings of $3.99 a share.
Stanley said the deal could add between 30 cents and 40 cents a
share of earnings by its third year.
(END) Dow Jones Newswires
January 30, 2020 02:47 ET (07:47 GMT)
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