Iowa-based avionics company Rockwell Collins has agreed to acquire B/E Aerospace in a deal worth US$ 6.4 billion, both the companies stated after finalising the terms of the deal.
Rockwell Collins Inc is a maker of electronics for aircraft cockpits facilities in Mexicali, Baja California, and B/E Aerospace is a supplier of airline cabins that supplies everything from seats to oxygen masks with operation in Nogales, Sonora.
According to a press release, Rockwell will pay US$ 62 per share, with US$ 34.10 per share to be paid in cash and US$ 27.90 in shares of Rockwell Collins common stock. This, analysts said was a 22.5 percent premium to B/E Aerospace’s closing price on last Friday. Having a capital of US$ 11 billion, Rockwell will undertake a debt of US$ 1.9 billion from B/E.
Rockwell’s website stated that it was expecting a turnover of US$ 160 million in annual cost savings including taxes. It also expected the share value to increase to somewhere in the “double-digits” in the fiscal year.
The deal will allow both companies to share their individual customers with each other and sell their products. Rockwell will also be able to provide connectivity on its flights that B/E provides.
The spring of 2017 will see the completion of the deal.
Although the deal has been approved by the boards of both the companies, it still awaits the approval of shareholders.
Chairman, president and chief executive of Rockwell, Kelly Ortberg said in the statement, “This transformational acquisition is consistent with our strategy to accelerate growth and build value through market-leading positions in cockpit and cabin solutions, we see tremendous opportunity to better serve our commercial aviation, business jet and military customers through broader offerings.”
Ortberg added, “It sets us up for the future. We’ve made major investments in next-generation airplanes. That trend is going to translate into the interiors of aircraft.”
In 2013, Rockwell had acquired Arinc in a US$ 1.39 billion takeover immediately after Kelly Ortberg was named chief executive.