Rockwell Collins has announced an agreement to acquire aircraft interiors supplier B/E Aerospace for $6.4 billion in cash and the assumption of $1.9 billion in net debt.
The transaction, which is expected to close in 2017 subject to board approvals of both companies, will blend B/E’s portfolio of galleys, lavatories and oxygen and lighting systems with Collins’ role as an electronics supplier and integrator for cabins and flightdecks.
Collins chief executive Kelly Ortberg called the deal a “transformational acquisition” across the aviation market, including commercial, military and business jet platforms.
“Our combined portfolio uniquely positions us to integrate cabin products, smart network technologies and connectivity solutions to significantly enhance aircraft uptime and airline profitability while improving the experience of passengers and airline personnel,” Ortberg says.
The agreement calls for Collins to pay B/E shareholders $34.10 per share in cash. Each B/E investor also will receive a certain number of Collins shares.
The $6.4 billion cash acquisition will be financed with debt, Collins says. The company still expects to maintain a strong investment grade credit rating with a net debt of $7.5 billion, of which $1.5 billion is planned to paid down by the end of fiscal 2019.
The deal should drive $160 million in “run-rate pre-tax cost synergies”, Collins says.