TransDigm Buys Franke Aquarotter's Aerospace Business - Analyst Blog
TransDigm Group Inc. TDG disclosed the acquisition of the aerospace business of Franke Aquarotter GmbH – one of the leading German sanitary specialists – for around $75 million. This all cash deal is at par with TransDigm’s strategy of strengthening its position as supplier of highly engineered aircraft components for in-service commercial and military aircrafts.
Details
Post completion of the acquisition, the acquired business of Franke Aquarotter will be combined with TransDigm’s Adams Rite lavatory product line in Fullerton, CA and named ‘Adams Rite Aerospace GmbH’.
Positioned at Ludwigsfelde, Germany, this company primarily develops products like proprietary faucets for commercial transports and regional jets with an employee base of 50 personnel. The firm mainly serves platforms like Airbus A320, A330, A380 as well as Bombardier and Embraer regional jets.
Bottom-Line
We are encouraged with TransDigm’s latest buyout, as the acquired firm derives about 65% of its revenues from the commercial aftermarket. Moreover, Franke Aquarotter has high repute in providing highly engineered proprietary lavatory products and significant aftermarket content. This justifies TransDigm’s decision to undertake the abovementioned acquisition. Encouragingly, like its other buyout, TransDigm expects this acquisition to pave the way for its shareholders’ wealth creation, going forward.
Of late, the company has been aiming at strengthening its product offering and reach via inking deals across the globe. Last month, to boost its handling equipment offering, TransDigm completed the acquisition of the cargo handling business of AAR Corp. AIR – Telair Cargo Group – for $725 million.
Notably, Telair Cargo Group enjoys a strong position in handling equipment and the related aftermarket globally. Prompted by this, TransDigm expects Telair revenues to be about $300 million with EBITDA margins approaching 20% for fiscal year ending May 2015. Over 80% of revenues are from the commercial aerospace market with the rest coming from the military aerospace market.
Zacks Rank
TransDigm currently holds a Zacks Rank #3 (Hold). Better ranked players worth considering include Hexcel Corp. HXL and GenCorp Inc. GY. Both stocks have a Zacks Rank #2 (Buy).
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