TransDigm Group Incorporated has recently entered into a definitive agreement with Esterline Technologies Corporation according to which, TransDigm will acquire all of Esterline’s outstanding shares of common stock for $122.50 per share. It will be an all cash transaction valued at nearly $4 billion, including the assumption of debt.
The Boards of Directors of both the companies have approved the deal, credible sources confirmed. TransDigm is looking to finance the acquisition primarily through the approx. $2 billion cash on hand and by incurring new term loans, while anticipating that the acquisition will be modestly accretive to the adjusted earnings per share of the company within the first year of ownership.
For the record, by acquiring Esterline TransDigm would expand its platform of sole source and proprietary content for the defense and aerospace sectors, together with substantial aftermarket exposure. Esterline is known as a leader in specialized manufacturing for these sectors with projected fiscal year 2018 revenues of approximately $2.0 billion.
TransDigm’s Executive Chairman, W Nicholas Howley said in a statement that buying Esterline fits well with the consistent and focused business strategy of TransDigm. He is confident Esterline’s leading position and TransDigm’s proven record in driving performance will enable the company to deliver to its investors returns that are similar to private equity.
Combining with TransDigm has offered improved value for Esterline shareholders and this deal could be the best possible result for its stakeholders as well, insisted Esterline President and CEO, Custis Reusser. He added that together, the two companies will be well-poised to achieve success across the global market they serve.
Sources informed that the deal is subject to customary closing conditions, which includes approval from Esterline stockholders and the receipt of necessary regulatory approvals. The transaction is expected to be completed by the second half of calendar year 2019.