Precision Castparts Corp.
) will be acquiring Permaswage SAS for $600 million in an all
cash transaction. The acquisition is primarily to enhance
Precision's offering in the airframe division. The deal is
expected to close during second quarter fiscal 2014, subject to
regulatory approvals and sanctions.
Permaswage is a leading designer and manufacturer of aerospace
fluid fittings. The company provides proprietary and standard
components, tooling and training to all major aerospace
Precision will include Permaswage into its Airframe Products
division as the latter's business is expected to improve the
value proposition for the airframe business by boosting
Precision's reach into permanent fittings. The Airdrome
acquisition had earlier strengthened Precision's separable
fittings business, and this latest acquisition further carries
the momentum higher. The Permaswage acquisition is expected to be
accretive to earnings immediately.
Apart from vertical integration, the acquisition of Permaswage
also provides Precision with geographic and product synergies.
Permaswage's core competence lies in designing and manufacturing
permanent fittings that are used in fluid conveyance systems for
airframe applications and related installation tooling. In
addition, Permaswage' swaged fittings and the increasing presence
in separable (threaded) fittings will also benefit Precision. The
company has facilities in Gardena, Calif.; Paris, France; and
Therefore, Precision is very optimistic about its acquisition
of Permaswage, as its permanent fittings business already enjoys
a favorable position in the current and next-generation
commercial aircraft platforms. Moreover, this acquisition comes
at an opportune time when globally the aerospace and the aircraft
manufacturers are witnessing increase in orders due to the
growing commercial traffic.
Precision Castparts currently has a Zacks Rank#3 (Hold).
However, some other companies operating in the same industry and
worth considering at the moment are
Century Aluminum Co
Kaiser Aluminum Corporation
Norsk Hydro ASA
). All three have a Zacks Rank #2 (Buy).
CENTURY ALUM CO (CENX): Free Stock Analysis
KAISER ALUMINUM (KALU): Free Stock Analysis
NORSK HYDRO ADR (NHYDY): Get Free Report
PRECISION CASTP (PCP): Free Stock Analysis
To read this article on Zacks.com click here.