Shares of Textron Inc. (TXT) closed up +0.20 or +0.56 percent on Thursday to $36.20 per share ahead of the company reporting it would acquire Beech Holdings LLC, parent company of Beechcraft Corporation for $1.4 in an all-cash deal. The stock traded up to $37.00 in afterhours trading after the takeover was announced.
The agreement will include the repayment of Beechcraft’s working capital debt and will be financed by Textron with available cash and as much as $1.1 billion in new debt. The former Hawker Beechcraft filed for Chapter 11 bankruptcy in May of 2012 and left court protection through a $600 million exit financing deal with JP Morgan Chase (JPM) in January of 2013. Textron expects the acquisition to be complete by early next year.
Providence, Rhode Island based Textron Inc. is a U.S. conglomerate originally started in Boston as a textile company in 1923 called the Special Yarns Corporation. Over the years, the company branched out into other industries and is presently best known for owning Cessna Aircraft and Bell Helicopter.
Wichita, Kansas based Beechcraft exited the jet business after filing for bankruptcy but continues manufacturing turboprops, and piston-powered aircraft. In addition to commercial aircraft, Beechcraft has extensive defense contracts, making military training aircraft for the US Air Force and the US Navy. Textron’s acquisition will add to the company’s line of propeller driven aircraft made by its Cessna subsidiary.
In Textron’s press release announcing the deal, Textron Chairman and CEO Scott C. Donnelly said, “The acquisition of Beechcraft is a tremendous opportunity to extend our general aviation business, from our customers’ perspective, this creates a broader selection of aircraft and a larger service footprint— all sharing the same high standards of quality and innovation. The iconic King Air product line perfectly complements our Caravan and Citation jet line-up and our combined global service network will deliver the superior level of services expected by our Cessna, Beechcraft and Hawker customers.”
Beechcraft CEO Bill Boisturean stated that “This transaction represents an important step forward in the evolution of Beechcraft’s business. The team at Beechcraft has worked tirelessly to strengthen our core business and to maintain our position as a leader in a highly competitive environment. Textron’s experience in the industry and its willingness to invest in and maintain the iconic Beechcraft brand make it an ideal parent company, one that will help us continue to satisfy our customers and meet our business objectives at a faster pace.”
Cessna has been under pressure as the market for corporate jets has declined, with corporate customers favoring longer range aircraft than the Caravan and Citation lines produced by Cessna. The acquisition will fuse two complementary product lines and will benefit Textron’s bottom line.
Adding to Textron’s bottom line, Beechcraft received a $1.4 billion order in August from Wheels Up, a private aviation club, for 105 King Air 350i aircraft, making it the largest order for propeller aircraft (by dollar value) in history. Textron stock traded up to just shy of its yearly high of $37.43 in afterhours trading on Thursday, signaling approval from investors for the acquisition.
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Textron and Boeing Together Net $39 Million in Defense Contracts Monday
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