Forget “merger Monday.” Two aerospace suppliers surprised investors Sunday announcing a merger of equals on what is supposed to be a day of rest.
Engine-technology maker Woodward (ticker: WWD) and advanced-materials supplier Hexcel (HXL) are combining in a $16 billion deal.
The companies are of similar size. Hexcel is worth about $7.2 billion, including debt. Woodward has a market value of about $9 billion. Woodward shareholders will receive 55% of the stock of the new entity.
“Both Woodward and Hexcel have attractive growth trajectories, with strong aftermarket positions and increased composite penetration driving our respective outlooks,” said Woodward CEO Tom Gendron in the company’s new release.
Woodward, essentially, makes engine components. Its sales growth is tied to the growth of commercial aerospace. Woodward components end up on Boeing (BA) 777 jets, as well as the Airbus (AIR.France) A350. Woodward also has an industrial business serving transportation and power generation markets.
Hexcel, on the other hand, makes advanced materials like carbon fiber composites that are used in the manufacture of new planes and wind turbines.
Deal synergies—which are often things like a reduction in corporate overhead—are expected to be $125 million a year, or about 2.4% of combined sales. That percentage is below some other deals, reflecting that these two companies don’t have a lot of overlap. This deal is has more vertical integration, combining different parts of the supply chain, than one competitor taking out another in similar areas of the supply chain.
Woodward shares are up about 60% over the past year, better than comparable gains of the S&P 500 and Dow Jones Industrial Average. Hexcel stock is up about 20% over the past year, lagging the broader market by a few percentage points.
Management hosted a conference call for investors and analysts at 5 p.m. eastern time Sunday evening.
Write to Al Root at allen.root@dowjones.com
Business - Latest - Google News
January 13, 2020 at 07:34AM
https://ift.tt/2NnALHn
Woodward, Hexcel Surprise Investors Sunday With Merger of Equals - Barron's
Business - Latest - Google News
https://ift.tt/2Rx7A4Y
Bagikan Berita Ini
0 Response to "Woodward, Hexcel Surprise Investors Sunday With Merger of Equals - Barron's"
Post a Comment