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Industry News
GKN eyes Spirit factories in Oklahoma

U.K.-based global engineering/manufacturing group GKN is said to be considering making a bid for two Spirit AeroSystems factories in the U.S. that make wing parts for Boeing aircraft.

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Posted on: 12/2/2013
Source: CompositesWorld

Global engineering/manufacturing group GKN plc (Redditch, Worcestershire, U.K.) is said to be considering a bid for two Oklahoma factories operated by Spirit AeroSystems (Wichita, Kan.). The plants of interest make wing parts for Boeing aircraft. That according to The Daily Telegraph in a story datelined Dec. 1, 2013, by Harriet Dennys.

The plants,accoding to the report, are owned by GKN’s American rival, Spirit AeroSystems Holdings, which appointed financial firm Morgan Stanley (New York, N.Y.) to find a buyer for the reportedly unprofitable Oklahoma operations in August 2013.

The two plants are located in Tulsa and McAlester. Combined, they employ about 3,000 people, or almost 20 percent of Spirit’s total workforce. The facilities supply wing structures and parts for Boeing’s 737, 777 and 787 commercial airliners.

The deal would fit with GKN’s strategy of targeting expansion in the aerospace sector, although any acquisitions will have to meet strict cost criteria. Reports that the two factories could command a $500 million purchase price are wide of the mark, according to the Telegraph. The final valuation is expected to be nearer the $250 million estimated by analysts at financial services firm UBS (London, U.K.).

Michael Callahan, an analyst at Topeka Capital Markets (New York, N.Y.), said it would be “difficult to find a buyer… willing to put up a significant price, because [the unit] is operating at a pretty significant loss.”

The auction for Spirit’s Oklahoma assets reportedly is still in the early stages, with GKN yet to make a formal bid. But Spirit, which also makes parts for Airbus, as well as Gulfstream and Bombardier, will be keen to find a buyer after a few rocky years in which cost overruns have hit profitability.

In July, Spirit announced it was cutting about 360 jobs in Kansas and Oklahoma, as part of a cost-cutting review by new chief Larry Lawson.

GKN reportedly declined to comment about its bid or the cost-cutting measures.


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