Boeing in Talks to Buy Aerospace-Parts Maker Woodward - Update
08 Febbraio 2018 - 05:27PM
Dow Jones News
By Dana Mattioli, Bradley Hope and Doug Cameron
Boeing Co. is in talks to buy aerospace parts maker Woodward
Inc., according to people familiar with the matter.
The companies have held talks over the past several months,
according to one of the people. Should there be a deal, it would be
substantial. Woodward had a market value of about $4.8 billion on
Thursday morning. Boeing, the world's largest aerospace company by
revenue, was valued at $205 billion following a surge in its stock
since 2016.
There is no guarantee, however, that the two sides will manage
to strike a deal and one doesn't appear to be imminent.
The talks underscore the takeover appetite of Boeing, which also
is trying to buy part or all of Embraer SA, the Brazilian maker of
smaller commercial jetliners and business jets.
A deal with Woodward would further Boeing's effort to in-source
more aircraft parts and cut costs to better compete with rival
Airbus SE in a commercial-jetliner market worth an estimated $140
billion this year.
Boeing is pressing suppliers for better terms and also building
more of its own parts, including cockpit systems and actuators, the
motors that control wing flaps and other systems.
Woodward, based in Fort Collins, Colo., makes both of these
products for commercial and military aircraft, as well as an array
of other items including engine parts, pumps and valves. The
company, which also has an industrial-machinery business focused on
the energy and utility sectors, had sales of $2.1 billion in fiscal
2017.
It isn't clear what Boeing would do with this business, which
had sales of around $750 million last year, if it bought
Woodward.
Producing more in-house could help Boeing avoid some of the
supply-chain snags affecting plane makers -- many stemming from
late delivery of engines and aircraft seats -- and give it a bigger
cut of the high-margin services and support market.
Boeing is flush with over $10 billion of cash and has become
increasingly active in the deal arena as it boosts production to
work through a backlog of more than 5,800 jetliners as well as
defense equipment.
The Chicago company last year bought closely held Aurora Flight
Sciences Corp., a maker of drones and pilotless flying systems.
Boeing Chief Financial Officer Greg Smith said at an investor
event on Wednesday that talks with Embraer were progressing. Though
the Brazilian company is viewed as a good strategic fit, he said a
deal wasn't a "must-do" unless it secured the right structure and
terms.
In December, Boeing and Embraer confirmed that they are in talks
after The Wall Street Journal reported on the negotiations. The two
sides remain in talks and are looking for ways to address the
Brazilian government's concerns about the potential tie-up. The
government has a golden share in Embraer, giving it veto power over
any transaction that would transfer control of the business.
Boeing is aiming to increase annual sales at its new services
arm to $50 billion within a decade from $15 billion last year,
though Chief Executive Dennis Muilenburg said last month that this
will be mainly through organic growth rather than acquisitions.
Woodward shares closed down 2.3% at $77.17 on Wednesday, valuing
the company at $4.7 billion. The stock was up 13% over the past
year, lagging behind the broader aerospace industry.
Write to Dana Mattioli at dana.mattioli@wsj.com, Bradley Hope at
bradley.hope@wsj.com and Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
February 08, 2018 11:12 ET (16:12 GMT)
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