TransDigm Group Inc.
) recently signed a definitive agreement to acquire Arkwin
Industries, Inc. The deal is an all cash transaction and is
valued at approximately $286 million.
The acquisition is a strategic move by TransDigm as the nature
of operation, commercial and military clients and products of
Arkwin perfectly complement TransDigm's existing portfolio.
Through this acquisition, TransDigm will be able to leverage
Arkwin's proprietary highly engineered aerospace hydraulic and
fuel system components for commercial and military aircraft,
helicopters and other specialty applications, thereby enhancing
the growth prospects for TransDigm.
Based in Westbury, NY, Arkwin primarily designs, manufactures
and produces hydraulic and fuel system components for civil and
military fixed-wing aircrafts, helicopters, spacecrafts, 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 the year 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
The acquisition of Arkwin is a good fit for TransDigm in every
way. 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 majorcommercial 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
acquisition is expected to close in the third quarter of 2013,
subject to customary closing conditions.
The decision to acquire Arkwin is a part of TransDigm's
long-term plan of expanding its product range with better
offering 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
) having a Zacks Rank #2 (Buy).
BOEING CO (BA): Free Stock Analysis Report
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
HONEYWELL INTL (HON): Free Stock Analysis
TRANSDIGM GROUP (TDG): Free Stock Analysis
To read this article on Zacks.com click here.