Rockwell Collins Buys B/E Aerospace: $6.4Bn plus $1.9Bn Debt

Rockwell Collins has announced that it is to acquire B/E Aerospace for approximately $6.4 billion in cash and stock, plus the assumption of $1.9 billion in net debt.
B/E Aerospace share owners will receive $62 per share in a mix of both cash and shares in Rockwell Collins common stock. The Rockwell Collins announcement stated that this represented a premium of 22.5 percent to the closing price of B/E Aerospace common stock on Friday, October 21, 2016.
The move combines Rockwell Collins’ capabilities in flight deck avionics, cabin electronics, mission communications, simulation and training, and information management systems with B/E Aerospace’s range of cabin interior products, which include seating, food and beverage preparation and storage equipment, lighting and oxygen systems, and modular galley and lavatory systems for commercial airliners and business jets.
“This transformational acquisition is consistent with our strategy to accelerate growth and build value through market-leading positions in cockpit and cabin solutions,” said Kelly Ortberg, chairman, president and chief executive officer of Rockwell Collins.
“B/E Aerospace has a leading position in nearly all the segments it serves and a highly visible, long-cycle backlog. Beyond new aircraft deliveries, its $12 billion installed base provides a strong flow of aftermarket retrofit opportunities that balances our current cyclical exposure to OEM production rates,” he continued, further adding that the acquisition is expected “to generate significant run-rate cost synergies and over $6 billion in free cash flow over the next five years with expected free cash flow conversion of greater than 100 percent.”
B/E Aerospace founder and chairman, Amin Khoury, stated, “Our combination with Rockwell Collins represents an excellent outcome for B/E Aerospace’s stockholders, who will receive an immediate premium as well as a substantial equity interest in a strong combined company with a broader range of products, customers, and the combined expertise and resources to create future value. We feel confident that this combination delivers significant long-term benefits neither company could realize on its own.”
Ortberg concluded, “I’m excited to welcome B/E Aerospace’s talented employees and bring together two industry leaders with complementary capabilities and strong reputations for innovation, quality and delivering sustained customer value.”

Support Agreement with Aibus SAS

In an unconnected agreement, Rockwell Collins signed with Airbus SAS to support its fleet of five A300-600ST (Super Transporter) Beluga aircraft. The Beluga fleet is responsible for transporting aircraft parts between Airbus facilities.
Thierry Tosi, vice president and general manager, Service Solutions for Rockwell Collins stated. “The Beluga fleet is a critical piece of the Airbus supply chain, so quality repairs, consistent, predictable maintenance costs, expeditious turnaround times and world class customer service are essential for successful operations.”
The agreement includes support for the following Rockwell Collins systems on board the Beluga: Communication systems, including Iridium SATCOM; HF Radio and Link 2000+ capable datalink with VDL Mode 2; radio navigation systems; surveillance systems including weather radar, traffic collision avoidance system (TCAS) and Mode S Transponder.

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