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Spirit cuts buyout price for Bombardier aerostructures unit as COVID-19 hits industry

Credit: REUTERS/NICK OXFORD

U.S. aircraft parts maker Spirit AeroSystems said on Monday it reached a deal with Bombardier Inc to cut the purchase price of the Canadian planemaker's aerostructures unit by 45% to $275 million as COVID-19 weighed on the aerospace sector.

Adds stock price, context

Oct 26 (Reuters) - U.S. aircraft parts maker Spirit AeroSystems SPR.N said on Monday it reached a deal with Bombardier Inc BBDb.TO to cut the purchase price of the Canadian planemaker's aerostructures unit by 45% to $275 million as COVID-19 weighed on the aerospace sector.

But under the revised deal, Spirit would assume liabilities valued at $824 million, the company's statement said, compared with $700 million in the original 2019 agreement.

The certainty around the deal, expected to close on Oct. 30, sent Bombardier shares 1.6 % shares higher in morning trading in Toronto.

Spirit caused jitters among Bombardier investors in late September when it raised uncertainty over the deal's closing.

The deal includes a facility in Belfast which produces wings for Airbus SE's AIR.PA A220 jet, which is considered politically sensitive as the largest high-tech manufacturer in Northern Ireland.

Montreal-based Bombardier is shedding assets amid broader plans to become a pure-play business-jet maker, and pay down some of its $9.3 billion in debt.

In September, French train maker Alstom SA ALSO.PA lowered its offer to acquire Bombardier's rail business by $350 million, in a deal to create the world's second-largest rail company by next year.

Bombardier's restructuring comes amid broader turmoil in the aerospace sector because of the pandemic, which has grounded flights across the globe, weakened valuations and some companies' appetite for deals.

Earlier this month, Air Canada AC.TO slashed its price to buy Canadian tour operator Transat A.T. Inc TRZ.TO by nearly 75% as the coronavirus pandemic weighs on travel demand.

In April, aircraft parts suppliers Hexcel Corp HXL.N and Woodward Inc WWD.O abandoned their planned $6.4 billion all-stock merger.

(Reporting by Allison Lampert in Montreal and Ankit Ajmera in Bengaluru; Editing by Shinjini Ganguli and Bernadette Baum)

((ankit.ajmera@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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