TransDigm Group Inc.
) recently closed the acquisition of Arkwin Industries, Inc. in
an all cash transaction worth approximately $286 million. The
decision to acquire Arkwin was announced on May 16, 2013.
The acquisition is a strategic move by TransDigm as Arkwin's
nature of operation, commercial and military clients and products
perfectly complement TransDigm's existing portfolio. Through this
acquisition, TransDigm will be able to leverage Arkwin's highly
engineered aerospace hydraulic and fuel system components for
commercial and military aircraft, helicopters and other specialty
applications, thereby enhancing its growth prospects.
Based in Westbury, NY, Arkwin primarily designs, manufactures
and produces hydraulic and fuel system components for civil and
military fixed-wing aircraft, helicopters, spacecraft, turbine
engines and special applications. Its products include hydraulic
subsystems, hydraulic swivel joints, actuators, fuel control
valves, reservoirs, hydraulic valve modules and hand pumps.
In 2012, Arkwin generated revenues of about $95 million and
its aftermarket services accounted for about 40% of its revenues,
while the commercial market contributed approximately 50% of the
consolidated revenue. Similarly TransDigm also generates about
57% of its net revenue from aftermarket.
Apart from product line synergies, with Arkwin on board,
TransDigm will further strengthen its relations with its
important customers like
The Boeing Company
), Airbus and
). This is because Arkwin's major commercial end-use platforms
include the Boeing 737 and 777, Airbus 320, and Bombardier and
Embraer regional jets. In addition, Arkwin also holds a strong
presence in the ground-based aero derivative turbine engines.
The decision to acquire Arkwin is a part of TransDigm's
long-term plan of expanding its product range with better
offerings to the aerospace industry. Prior to this, in Apr 2013,
TransDigm had acquired Aerosonic for approximately $39 million.
Through this acquisition, TransDigm intends to leverage
Aerosonic's proprietary air data and display technologies with
the help of its broad market presence and financial strength,
thereby enhancing its growth prospects.
TransDigm currently has a Zacks Rank #3 (Hold). However,
another company operating in the same industry and worth
considering at the moment is
Honeywell International Inc.
) having a Zacks Rank #2 (Buy).
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