WICHITA, Kan., Oct. 31, 2019 /PRNewswire/ -- Spirit AeroSystems
Holdings, Inc. (NYSE: SPR) today announced it has entered into a
definitive agreement to acquire select assets of Bombardier
aerostructures and aftermarket services businesses in
Belfast, Northern Ireland (known
as Short Brothers); Casablanca,
Morocco; and Dallas,
United States, for cash
consideration of $500 million. In
addition, Spirit AeroSystems will assume approximately $300 million in net pension liabilities, and
approximately $290 million of
government grant repayment obligations, for a total enterprise
valuation of $1,090 million, which
equals 10 times the 2019 estimated Adjusted EBITDA of the acquired
business. At closing, Spirit AeroSystems will pay $500 million to Bombardier and will make a cash
contribution of approximately $130
million towards the pension liability, for total cash at
closing of $630 million.
"The Bombardier operations bring world-class engineering
expertise to Spirit and add to a strong track record of innovation,
especially in advanced composites," said Spirit AeroSystems
President and Chief Executive Officer Tom
Gentile. "Belfast has
developed an impressive position in business jet fuselage
production, in addition to the world-acclaimed fully integrated
A220 composite wing. This acquisition is in line with our growth
strategy of increasing Airbus content, developing low-cost country
footprint, and growing our aftermarket business."
Gentile added that the Spirit team is excited about the
opportunity to expand its operations into Northern Ireland and Morocco. The addition of the entire work
package for the A220 wing and its technology are critical for the
future of next-generation aircraft.
The acquired Bombardier operations employ more than 4,000
people at three sites comprising approximately 3.4 million square
feet. The backlog of work includes long-term contracts on the
Airbus A220 and A320neo, along with Bombardier business and
regional jets.
In aerostructures and fabrication, the acquired business is a
global player, delivering composite and metallic wing components,
nacelles, fuselages and tail assemblies, along with high-value
mechanical assemblies made out of aluminum, titanium and steel. The
acquired business also brings a world-class aftermarket business
which more than doubles Spirit's geographic reach globally.
The expected revenues of the acquired Bombardier operations will
be approximately $1 billion in 2019.
The transaction, which is expected to close in the first half of
2020, is subject to regulatory approvals and customary closing
conditions. Spirit AeroSystems expects to realize approximately
$60 million in synergies from the
acquisition, which values the acquisition on a post-synergy EV /
EBITDA multiple of 6.5x.
Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC
served as financial advisors to Spirit.
On the web: www.spiritaero.com
About Spirit AeroSystems
Spirit AeroSystems designs
and builds aerostructures for both commercial and defense
customers. With headquarters in Wichita, Kansas, Spirit operates sites in the
U.S., U.K., France and Malaysia. The company's
core products include fuselages, pylons, nacelles and wing
components for the world's premier aircraft. Spirit
AeroSystems focuses on affordable, innovative composite
and aluminum manufacturing solutions to support customers around
the globe. More information is available
at www.spiritaero.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains "forward-looking statements" that
may involve many risks and uncertainties. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as "aim," "anticipate," "believe,"
"could," "continue," "estimate," "expect," "goal," "forecast,"
"intend," "may," "might," "objective," "outlook," "plan,"
"predict," "project," "should," "target," "will," "would," and
other similar words, or phrases, or the negative thereof, unless
the context requires otherwise. These statements reflect
management's current views with respect to future events and are
subject to risks and uncertainties, both known and unknown. Our
actual results may vary materially from those anticipated in
forward-looking statements. We caution investors not to place undue
reliance on any forward-looking statements. Important factors that
could cause actual results to differ materially from those
reflected in such forward-looking statements and that should be
considered in evaluating our outlook include, but are not limited
to, the following: 1) our ability to continue to grow our business
and execute our growth strategy, including the timing, execution,
and profitability of new and maturing programs; 2) our ability to
perform our obligations under our new and maturing commercial,
business aircraft, and military development programs, and the
related recurring production, including our ability to meet
contractually required production rate increases; 3) our ability to
accurately estimate and manage performance, cost, and revenue under
our contracts, including our ability to achieve certain cost
reductions with respect to the B787 program and other programs; 4)
margin pressures and the potential for additional forward losses on
new and maturing programs; 5) our ability and our suppliers'
ability to accommodate, and the cost of accommodating, announced
increases in the build rates of certain aircraft and expanding
model mixes; 6) the effect on aircraft demand and build rates of
changing customer preferences for business aircraft, including the
effect of global economic conditions on the business aircraft
market and expanding conflicts or political unrest; 7) customer
cancellations or deferrals as a result of global economic
uncertainty or otherwise; 8) the effect of economic conditions in
the industries and markets in which we operate in the U.S. and
globally and any changes therein, including fluctuations in foreign
currency exchange rates; 9) the success and timely execution of key
milestones such as the receipt of necessary regulatory approvals,
including our ability to obtain any required regulatory or other
third party approvals for the consummation of our announced
acquisitions of Asco and select Bombardier operations, and customer
adherence to their announced schedules; 10) our ability to
successfully negotiate, or re-negotiate, future pricing under our
supply agreements with Boeing and our other customers; 11) our
ability to enter into profitable supply arrangements with
additional customers; 12) the ability of all parties to satisfy
their performance requirements, including our ability to timely
deliver quality products, under existing supply contracts with our
two major customers, Boeing and Airbus, and other customers, and
the risk of non-payment by such customers; 13) any adverse impact
on Boeing's and Airbus' production of aircraft resulting from
cancellations, deferrals, or reduced orders by their customers or
from labor disputes, domestic or international hostilities, acts of
terrorism, or government action such as mandatory aircraft fleet
grounding; 14) any adverse impact on the demand for air travel or
our operations from the outbreak of diseases or epidemic or
pandemic outbreaks; 15) our ability to avoid or recover from
cyber-based or other security attacks, information technology
failures, or other disruptions; 16) returns on pension plan assets
and the impact of future discount rate changes on pension
obligations; 17) our ability to borrow additional funds or
refinance debt; 18) competition from or in-sourcing by commercial
aerospace original equipment manufacturers and competition from
other aerostructures suppliers; 19) the effect of governmental
laws, such as U.S. export control laws and U.S. and foreign
anti-bribery laws such as the Foreign Corrupt Practices Act and the
United Kingdom Bribery Act, and environmental laws and agency
regulations, both in the U.S. and abroad; 20) the effect of changes
in tax law, such as the effect of The Tax Cuts and Jobs Act that
was enacted on December 22, 2017, and
changes to the interpretations of or guidance related thereto, and
the Company's ability to accurately calculate and estimate the
effect of such changes; 21) any reduction in our credit ratings;
22) our dependence on our suppliers, as well as the cost and
availability of raw materials and purchased components; 23) our
ability to recruit and retain a critical mass of highly skilled
employees and our relationships with the unions representing many
of our employees, including our ability to avoid labor disputes and
work stoppages with respect to our union employees; 24) spending by
the U.S. and other governments on defense; 25) the possibility that
our cash flows and our credit facility may not be adequate for our
additional capital needs or for payment of interest on, and
principal of, our indebtedness; 26) our exposure under our
revolving credit facility to higher interest payments should
interest rates increase substantially; 27) the effectiveness of any
interest rate hedging programs; 28) the effectiveness of our
internal control over financial reporting; 29) the outcome or
impact of ongoing or future litigation, claims, and regulatory
actions; 30) our exposure to potential product liability and
warranty claims; 31) the consummation of our announced acquisition
of select Bombardier operations in a timely fashion and the
realization of the expected revenues of the acquired Bombardier
operations, 32) our ability to effectively assess, manage and
integrate acquisitions that we pursue, including our ability to
successfully integrate the Asco business and select Bombardier
operations, and generate synergies and other cost savings
therefrom; 33) the consummation of our announced acquisition of
Asco while avoiding any unexpected costs, charges, expenses, and
adverse changes to business relationships and other business
disruptions for ourselves and Asco as a result of the acquisition;
34) our ability to continue selling certain receivables through our
supplier financing programs; 35) the risks of doing business
internationally, including fluctuations in foreign currency
exchange rates, impositions of tariffs or embargoes, trade
restrictions, compliance with foreign laws, and domestic and
foreign government policies; 36) prolonged periods of inflation
where we do not have adequate inflation protection in our customer
contracts, among other things; and 37) the timing and conditions
surrounding the return to service of the 737 MAX fleet and related
impacts on our production rate. These factors are not exhaustive
and it is not possible for us to predict all factors that could
cause actual results to differ materially from those reflected in
our forward-looking statements. These factors speak only as of the
date hereof, and new factors may emerge or changes to the foregoing
factors may occur that could impact our business. As with any
projection or forecast, these statements are inherently susceptible
to uncertainty and changes in circumstances. Except to the extent
required by law, we undertake no obligation to, and expressly
disclaim any obligation to, publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise. Additional information concerning
these and other factors can be found in our filings with the
Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
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SOURCE Spirit AeroSystems Holdings, Inc.