Meggitt PLC (Christchurch, UK) has agreed to acquire the composites division of EDAC (Cheshire, CT, US), formerly known as Parkway Aerospace & Defense, from Greenbriar Equity Group and other associated sellers for US$340 million in cash.
EDAC's composites division produces highly engineered aerospace components for jet engine and airframe applications, with more than 85% of revenues in civil aerospace composites. Key customers include GE, Snecma and United Technologies. The business has a substantial presence, via multi-year, long-term agreements, in high-growth jet engine platforms including the GEnx, Pratt & Whitney PurePower family and LEAP engines.
EDAC's composites division has sites in Erlanger, KY, and Cincinnati, OH (both in the US), and two sites, one of which is a joint venture with UTC Aerospace Systems, in Saltillo, Mexico. The joint venture site focuses on the manufacture of secondary aerospace structures. The business has a combined workforce of 579.
Combined with the existing composite activities of Meggitt, this acquisition and the recently announced complementary acquisition of the advanced composites businesses of Cobham PLC, will create what Meggitt says is a world class franchise in high-growth niche composite components focusing on engine components, secondary structures, ice protection and radomes.
The EDAC business will be integrated into Meggitt Polymers & Composites (MPC), a division of Meggitt PLC.
Stephen Young, group chief executive of Meggitt, says, "This business is a rare, scale player in civil engine and other composite parts. Like the complementary acquisition of the advanced composites businesses of Cobham plc for which the completion process is well underway, this decisively moves our composites strategy forward, and positions us strongly in this key growth area.
“Our product portfolio will be significantly enhanced by these composites acquisitions, and we will benefit from decades of expertise in the complex processes required to manufacture highintegrity composite components in volume. These capabilities will enable us to better address the increasing demand for composites, particularly around the engine and ancillary systems.”
Revenues for the EDAC business in 2015 are expected to be US$104 million and the purchase price, adjusted to exclude the $25 million present value of the tax asset acquired with the business, implies a multiple of 12.5x 2016 estimated EBITDA. The transaction will, subject to the completion of standard documentation, be financed by the previously announced debt facilities which are being increased to $600 million.
Editor PickGardner Business Index at 54.1 in January
The US composites industry looks as strong as it has since early 2015, with expectations the highest in years.