) follows a steady inorganic growth strategy to boost its
operations. The company announced that it will acquire all
outstanding equity interests in Beech Holdings, LLC ("Beech
Holdings") for about $1.4 billion in cash. Textron expects to
complete the transaction during the first half of 2014, subject
to several approvals.
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Wichita, Kan.-based Beech Holdings is the parent company of
Beechcraft Corporation. The company has expertise in designing
and constructing several kinds of aircraft, including the King
Air turboprops, piston-engine Baron and Bonanza and the T-6
trainer and AT-6 light attack military aircraft. The company
provides products and services to individuals, businesses and
numerous government organizations.
We note that this is the third acquisition deal signed by Textron
in the final quarter of the year. On Nov 22, 2013, the company
agreed to acquire two flight simulation and aircraft training
product companies - Mechtronix Inc. and OPINICUS Corporation.
Textron expects to close the two above mentioned transactions by
the end of 2013.
As of Sep 28, 2013, Textron had a cash balance of $0.4 billion.
In Oct 2013, the company entered into a senior unsecured
revolving credit facility for an aggregate principal of $1
billion. The company will fund this acquisition from a
combination of cash on hand and the proceeds from the issue of
During the first nine months of 2013 the company spent $53
million on acquisitions, up 560% from the prior year comparable
period. The surge in expenses was primarily driven by the
acquisition of two service centers.
Textron is known to acquire assets having the same line of
business, which are immediately accretive. Acquisitions in the
past have helped the company to expand its core offerings.
We expect the current acquisition to be immediately accretive,
given Beech Holdings' wide array of product offerings. Textron
can match its Caravan and Citation jet line-up with Beech
Holdings' King Air product line. The acquisition will also enable
the company to experience operational synergy in terms of
improving research and development expertise and enhancing the
Textron currently has a Zacks Rank #3 (Hold). Other well-ranked
stocks worth considering in the aerospace and defense sector
Carlisle Companies Incorporated
), each with a Zacks Rank #2 (Buy).