The possible meaning of mergers and acquisitions

Avcorp acquires Hitco Carbon Composites, Precision Castparts acquires Composites Horizons and Lockheed Martin acquires Sikorsky. What the heck?
#f-35 #lockheedmartin #787


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Sikorsky's composites-intensive CH-53K heavy-lift helicopter, which is in the pre-production development phase, will become a product of Lockheed Martin product with Lockheed's acquisition of Sikorsky.

There were three significant acquisitions announced this week, each with direct or indirect relationship to the composites industry:

  • Lockheed Martin will acquire Sikorsky Aircraft
  • Avcorp acquires Hitco Carbon Composites
  • Precision Castparts Corp. buys Composites Horizons

It's hard to say exactly how these acquisitions might play out from an aerospace business perspective, but each one does give composites observers something to think about.

The news about Hitco might be the biggest head-scratcher. The Gardena, CA-based fabricator, which until this week was owned by Germany-based SGL Group, has been on what appeared to be a well-managed growth curve for several years, winning work making parts for Boeing's 787 and Lockheed Martin's F-35, among others. The last couple of years, however, have seen Hitco's profile diminish and fade, and soon we were hearing reports that SGL wanted to divest the company. Indeed, SGL reported on Monday (July 20) that the agreement to sell Hitco to Canada-based Avcorp "will result in overall negative proceeds of US$47 million, which consists of payments to Avcorp, repayments of customer advance payments as well as costs relating to various services to the benefit of the buyer." Hitco clearly has the potential to return to health, but Avcorp will have its hands full making it happen.

Composites Horizons (Covina, CA, US), which specializes in fabrication of composite parts and structures for high-temperature applications, had seemed well-placed as part of AIP Aerospace (Santa Ana, CA). AIP's other holdings include Ascent Tooling Group, Coast Composites, Odyssey Industries (Lake Orion, MI, US) and Global Tooling Systems (Macomb Township, MI, US), so its divesture of Composites Horizons to Precision Castparts comes as a modest surprise. The appeal of Composites Horizons from Precision Castparts' perspective is understandable: Precision Castparts is, primarily, a fabricator of metal aerospace parts, with some composites manufacturing capability. Composites Horizons gives it, suddenly, substantial composites expertise. 

The Lockheed Martin acquisition of Sikorsky is notable to this industry primarily because of the volume of composite materials involved. Lockheed Martin is already assembling the F-35 Lightning II fighter, and has several tiers of suppliers around the world fabricating composite structures for that craft. The acquisition of Sikorsky adds to the Lockheed portfolio a massive rotorcraft manufacturer that is using composites substantially throughout its products — in old ways and new. Of particular interest is the in-development CH-53K heavy-lift helicopter, which features composites in the fuselage, blades and other strucdtures. If Lockheed Martin has not bitten off more than it can chew with the Sikorsky ingestion, then Lockheed Martin stands to become an even more important player in the composites marketplace. 

In any case, each of these three deals will bear careful scrutiny over the next few years to see how they evolve and develop. As the saying/"curse" goes: May you live in interesting times.

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