In an all cash deal,
TransDigm Group Incorporated
) will be acquiring the assets of
General Electric Company
) Aviation's Electromechanical Actuation Division for roughly
$150 million. Subject to regulatory requirements, the transaction
is expected to close by the end of the third quarter of 2013.
Post-acquisition, TransDigm will operate the business through
a new unit, Whippany Actuation Systems. Based in Whippany, NJ,
this company primarily engages in manufacturing flagship
aerospace electromechanical motion control subsystems for civil
and military applications.
The acquisition is a part of TransDigm's long-term strategy to
acquire aerospace businesses with significant aftermarket
content. In addition, GE Aviation's Electromechanical Actuation
Division's products are used on many commercial platforms with
OEM and aftermarket growth opportunities. Therefore, the business
perfectly complements the existing business of Whippany Actuation
Systems. For 2013, Whippany revenues are expected at $80 million,
out of which aftermarket sales will contribute about 40% and
commercial market will account for 50%.
GE Aviation is the world's leading producer of large and small
jet engines for commercial and military aircraft. The company's
engines are primarily used by leading aerospace and aircraft
manufacturing companies like The
Precision Castparts Inc
), Airbus etc for commercial end use. These engines also align
well with Whippany's product offerings and customers. Whippany's
product offerings include control electronics, motors, high power
mechanical transmissions and actuators.
TransDigm has been acquiring aerospace companies of late. 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. In June, the company
closed the acquisition of Arkwin Industries, Inc. in an all cash
transaction worth approximately $286 million. Through this
acquisition, TransDigm intends 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.
TransDigm currently has a Zacks Rank #3 (Hold).
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