Independent Companies Will Focus On Manufacturing Of Aircraft Cabin Interior Equipment, Distribution, Logistics and Technical Services

B/E Aerospace, a manufacturer of aircraft cabin interior products and the world’s leading provider of aerospace fasteners, consumables and logistics services, announced Tuesday that the Company’s Board of Directors has commenced a process to separate its industry-leading businesses into two independent, publicly traded companies — one focused on aircraft cabin interior equipment – design, development, manufacturing, certification and direct sales on a global basis (“Manufacturing Co.”), and the other focused on distribution, logistics and technical services for the aerospace and energy services markets (“Services Co.”).

The Company said that the separation announcement represents an important step in its ongoing strategic review process, noting that the Company’s Board and management are continuing to review and aggressively pursue its strategic alternatives to enhance value to shareholders.

Each of the new companies will be a global leader in its respective market. B/E has positioned both businesses to be successful, profitable and sustainable independent companies, and this decision reflects a further evolution of the Company’s strategies emphasizing the development of the Company’s businesses, addressing their distinct needs and thereby increasing their value to shareholders.

“Our decision to separate the businesses was made as part of the evaluation of the Company’s strategic alternatives which has been undertaken by our management team and Board of Directors, together with our independent advisors,” said Amin Khoury, the Company’s Chairman and Co-Chief Executive Officer. “Separating these highly successful businesses into two industry-leading companies will allow each to benefit from increased management focus and operational flexibility, as well as allow the management teams and boards of directors of each business to determine the optimal capital structure, free cash flow allocation policy, growth strategy, compensation system and performance measurement metrics. This decision reflects B/E’s ongoing commitment to optimize the distinct needs of each of our businesses and the Company’s strategic priorities, consistent with our focus on driving shareholder value.”

Subject to further financial, tax and legal analysis, the Company currently plans to separate the businesses by way of a tax-free distribution to B/E’s shareholders, which would result in shareholders of the Company holding shares in two independent and publicly traded companies:

The Services business will offer a broad range of aerospace hardware and consumables and inventory management services. With a large and diverse customer base, this business serves as a distributor for every major aerospace fastener manufacturer, offering services which include inventory management and replenishment, creative and differential supply chain solutions, special packaging and bar-coding, sophisticated parts kitting, quality assurance testing and a wide variety of purchasing assistance programs, plus the latest in electronic data interchange capability. In 2013, the business initiated an expansion into technical and logistics services and associated rental equipment for remote energy industry drilling sites. On a pro-forma basis, Services Co. had revenues of approximately $1.6 billion and EBITDA (excluding transaction expenses) of approximately $365 million, representing 22.8% of revenues, for the trailing 12 months ending March 31, 2014, as adjusted for all recent acquisitions as if they had been made as of January 1, 2013.

The aircraft cabin interior equipment design, development, manufacturing, certification and direct sales business, which will include the Company’s commercial aerospace and business jet segments (Manufacturing Co.), is a manufacturer of aircraft cabin interior products for both commercial airliners and business jets, including a broad range of seating products with a wide variety of comfort and entertainment features, food and beverage preparation and storage equipment, lighting systems, oxygen systems, modular lavatory systems and galley systems which are each complemented with very sophisticated, best-in-class R&D, engineering services, program management and certification services. Manufacturing Co. had revenues of approximately $2.5 billion and EBITDA of approximately $510 million, representing 20.4% of revenues, for the trailing 12 months ending March 31, 2014.

“Each of our businesses, Manufacturing Co. and Services Co., is already an industry leader, and by leveraging the benefits which we believe will result from allowing these businesses to independently pursue more focused, targeted strategies, each will be well-positioned to generate even greater value to both our customers and our shareholders,” Khoury said.

FMI: www.beaerospace.com