Boeing Up on Steady Acquisitions - Analyst Blog
The Boeing Company
) continues with its systemic acquisition program. The company
announced that it has acquired Dutch firm AerData Group B.V.
(AerData") for an undisclosed amount. AerData is the second
technology company that the aerospace behemoth has agreed to buy in
less than a week. The market reacted positively to the news and the
share price edged up 1.3% to $134.17 on May 27, 2014 from last
Schiphol, the Netherlands-based AerData offers integrated software solutions for lease management, engine fleet planning, records scanning, and several technical and back-office services for different parties, including aircraft and engine operators, lessors and maintenance, repair and overhaul (MRO) service providers. The company has a wide array of products - CMS lease and asset management software, EFPAC engine management system, EFPAC engine management system and many more. Apart from the Netherlands, the company has presence in the U.K., the U.S. and Ireland.
Post transaction, the products and services of AerData will be integrated into the company's Boeing Edge business. Boeing Edge, a part of the company's Commercial Airplanes division, provides a suite of aviation services including parts, training, engineering, and maintenance and software solutions to airlines and leasing companies.
The AerData acquisition will enable Boeing to offer better quality devices, which will help the airlines and leasing companies to manage complex maintenance records. As AerData has a significant presence in the airline and leasing industry and has business alliance with the flag carrier airlines of the Netherlands Koninklijke Luchtvaart Maatschappij N.V. (KLM), Emirates, Air New Zealand, Dragon Aviation Leasing and Rolls-Royce, the acquisition will expand Boeing's product offering besides increasing the customer base. AerData on the other hand will gain access to Boeing's vast global support network.
Recently, Boeing inked another deal to boost its Boeing Edge capabilities. On May 23, the company announced that it has agreed to acquire U.K.-based ETS Aviation (ETS). ETS primarily provides fuel-efficiency management and analytics software. The transaction is scheduled to be completed in second-quarter 2014.
Boeing has a strong customer base in Europe. Leveraging on existing footprint, the back-to-back acquisitions of Dutch and British technology firms will further enable Boeing to strengthen its operations in the mainland European market. Boeing's Commercial Airplane division is also geared up to meet the growing demand from the Asian countries.
Boeing maintains a stable cash position backed by strong cash generation capacity. As of Mar 31, 2014, the company's cash balance was around $6.94 billion. In the first three months of 2014, operating cash flow jumped 112.2% to $1.1 billion from the prior-year level. A strong financial position supports Boeing's steady inorganic growth initiatives.
Boeing currently carries a Zacks Rank #3 (Hold). However, some better-ranked stocks in the aerospace and defense sector include Embraer SA ( ERJ ), Huntington Ingalls Industries, Inc. ( HII ) and CAE Inc. ( CAE ). While Embraer SA carries a Zacks Rank #1 (Strong Buy), Huntington and CAE hold a Zacks Rank #2 (Buy).
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