Boeing entered into a definitive agreement to acquire supplier Spirit AeroSystems in an all-stock deal at an equity value of $4.7 billion following months of negotiations as the US plane maker tries to tackle a series of manufacturing glitches amid a safety and quality crisis.
The total transaction value is approximately $8.3 billion, including Spirit's last reported net debt, with Boeing paying $37.25 per share, it said in a statement on Monday.
Each share of Spirit common stock will be exchanged for a number of shares of Boeing common stock equal to an exchange ratio between 0.18 and 0.25.
“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,” Dave Calhoun, Boeing's president and chief executive, said.
“By reintegrating Spirit, we can fully align our commercial production systems, including our safety and quality management systems, and our workforce to the same priorities, incentives and outcomes – centred on safety and quality.”
The deal takes Spirit AeroSystems back into Boeing after the companies split in 2005 to cut costs and outsource some assets.
Boeing's move to reunite with Spirit AeroSystems comes in the wake of a near-disaster on January 5 when a fuselage that had been assembled by Spirit lost a door-shaped panel in mid-flight.
US federal officials ordered the immediate grounding of some Boeing 737 Max 9 aircraft pending inspections after the Alaska Airlines flight carrying 177 passengers suffered a blowout that left a hole in its fuselage.
Following the incident, Boeing undertook a top management shake-up and fell under the scrutiny of federal investigators.
“Spirit is instrumental to BA's [Boeing's] success,” investment firm Jefferies said in an equity research note last month while the companies were still negotiating the reintegration.
“Vertical integration will give BA more control over its own destiny, regardless of the cost to turn operations around, while providing some stability for the industry at large,” Jefferies said in a separate note.
Airbus agreement
Airbus on Monday also said it has entered into a binding term sheet agreement with Spirit AeroSystems for a potential acquisition of its major activities related to the European plane maker.
This mainly entails the production of A350 fuselage sections in Kinston, North Carolina, and St Nazaire in western France; the A220’s wings and mid-fuselage in Belfast, Northern Ireland, and Casablanca, Morocco; as well as the A220 pylons in Wichita, Kansas.
“With this agreement, Airbus aims to ensure stability of supply for its commercial aircraft programmes through a more sustainable way forward, both operationally and financially, for the various Airbus work packages that Spirit AeroSystems is responsible for today,” the company said.
After Spirit AeroSystems cut away from Boeing, it had diversified into supplying Airbus and others.
Airbus said the new deal would cover the acquisition of the production activities.
The Toulouse-based plane maker will pay a nominal price of $1 for the assets and will be receiving $559 million in compensation from Spirit AeroSystems.
“Entering into definitive agreements remains subject to an ensuing due diligence process,” Airbus said.
“While there is no guarantee that a transaction will be concluded, all parties are willing and interested to work in good faith to progress and complete this process as timely as possible.”
