GR Goodrich Corp. (The)

Goodrich Corporation (GR) said it has successfully acquired Microtecnica from the European private equity firm Stirling Square Capital Partners, as was agreed on April 1, 2011. Goodrich paid about €331 million ($478 million) in cash for the acquisition.

Goodrich said the acquired company will be part of its Actuation Systems business, within its Actuation and Landing Systems segment. 

Microtecnica is a leading provider of flight control actuation systems for helicopter, regional and business aircraft, missile actuation, and aircraft thermal and environmental control systems.  The company’s facilities are located in Turin, Luserna San Giovanni ; Brugherio, Italy and Bristol, UK and employs nearly 700 people.

Microtecnica has significant sales in both the commercial aerospace and the defense and space markets. With approximately 25% of sales in the commercial and military helicopter markets, Goodrich expects the acquisition to strengthen its position in the European market. Microtecnica mainly sells its products to AgustaWestland, Alenia, Hamilton Sundstrand, Avio, Bombardier and Eurocopter.

Goodrich said it expects sales from the business to be about $220 million for 2011, and should grow significantly in the coming years.

Goodrich is a global supplier of components and systems for communications and avionics. Most of the company’s products are sold to government and commercial customers that will lead to higher volume sales and will create economies of scale thus helping to win cost-sensitive government contracts. The company also provides niche equipment, which has a captive market until the retirement of the specific model.

Goodrich presently retains a short-term Zacks #2 Rank (Buy), which compares favorably to its peer United Technologies Corp. (UTX) with a Zacks #3 Rank (Hold). The bullish outlook for Goodrich is supported by its geographically-diverse customer mix, its diverse presence in both commercial and business jets, the resurgence in commercial aftermarket sales, a strong balance sheet, an incremental dividend and an ongoing share repurchase program.

This is, however, offset by uncertainty in the recovery of the large commercial airplane original equipment market, along with possible defense cutbacks, dependence on international sales, high research and development overheads and regulatory risks. We maintain our long-term Neutral recommendation on the stock.

Based in Charlotte, North Carolina, Goodrich Corporation supplies components, systems and services to the commercial, regional, business and general aviation markets in the U.S. and in other parts of the world. Goodrich also supplies aircraft and satellite systems to the global military and space markets. Goodrich’s products and services are principally sold to customers in North America, Europe and Asia.

 
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