TransDigm Acquires Aero Instruments

Zacks

TransDigm Group Incorporated (TDG) recently announced that it has acquired Aero-Instruments Co., LLC for about $35 million in cash. Cleveland-based Aero Instruments has been engaged in supplying aerospace components to the concerned industry for about 87 years.

TransDigm has been aggressively targeting comparatively smaller companies who are mostly niche players since the second half of 2011. The most recent was the acquisition of AmSafe in February 2012 for $750 million. AmSafe is a renowned manufacturer of aviation passenger seatbelts and airbags. More than 90% of aircrafts worldwide are using AmSafe’s products.

Further, Amsafe is the only company to have a seatbelt airbag system installed worldwide on both commercial transport and general aviation aircraft. Moreover, the company also makes different type of cargo and restraint products.

With employee strength of just about 60, Aero Instruments primarily designs and manufactures highly engineered air data sensors that comprise pilot probes, pilot-static probes, static pressure ports, angle of attack, temperature sensors and flight test equipment deployed primarily in the business jets and helicopters.

Aero Instruments derives about 60% of its total revenue from the aftermarket and about 20% from the military. In fiscal 2011, approximately 56% of net sales were generated from aftermarket sales, mainly from the commercial and military aftermarkets. Therefore, this acquisition of Aero Instruments is a strategic fit for TransDigm.

In addition, the company also had a robust third quarter with its top line and bottom line up 65% and 40%, respectively. TransDigm Group Inc. designs, produces, and supplies engineered aircraft components for use on commercial and military aircraft. The company operates principally in the US.

 We maintain a Zacks #3 Rank (short-term Hold rating) on TransDigm.

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