Merger Expected To Be Approved By Q3 2006
Last week, Aero-News
reported that Boeing -- helped by a very strong showing
of its commercial aircraft division in the first quarter of 2006 --
took in 29 percent increase in profit over the same period in
2005. On Monday, Boeing announced its plans to
spend some of its cash -- by purchasing aerospace parts and
services provider Aviall, Inc.
Under terms of the all-cash acquistion, Boeing is purchasing
Dallas, TX-based Aviall for $48 per share -- or $1.7 billion.
Boeing will also assume approximately $350 million of net debt as
part of the transaction. Aviall's 2005 revenue was $1.3 billion,
with more than 25 percent growth expected in 2006.
"The aviation services
market offers us tremendous opportunities to profitably grow our
business, internally and externally, to better serve our commercial
and military customers," said Boeing Chairman, President and Chief
Executive W. James McNerney (right). "This acquisition is uniquely
powerful in that it leverages the strong and growing services units
of both our commercial and military businesses. It demonstrates our
commitment to create a Boeing that is more than just the sum of its
parts," McNerney said.
"We are delighted to become part of The Boeing Company," said
Paul Fulchino, chairman, president and chief executive officer of
Aviall. "Our combined industry knowledge creates a dynamic team
that will continue to enable our customers to achieve greater
efficiency, operational savings and profitability."
Aviall will report to Boeing Commercial Aviation Services and
operate as a wholly-owned subsidiary. Commercial Aviation Services
offers Integrated Materials Management (IMM) services to airline
Through the IMM program, Boeing and selected suppliers maintain
an airline's inventory of maintenance supplies -- including spare
parts -- and provide items only as needed, reducing the airline's
cost and complexity of doing business.
Aviall's parts ordering and supply chain management capabilities
will also be utilized by Boeing's Integrated Defense Systems'
Support Systems business.
"Aviall will quickly become an integral part of our Commercial
Aviation Services business and accelerate our Integrated Materials
Management program," said Alan Mulally, Boeing Commercial Airplanes
president and CEO.
"Aviall is customer focused, has a strong growth plan and proven
track record of solid financial performance. It is a perfect fit
for our strategy of providing supply chain management solutions
that help our airline and military customers operate more
efficiently and productively," Mulally said.
The completion of the transaction is subject to customary
conditions and relevant authorities' approval and is expected to
close by the end of the third quarter 2006. Boeing plans to fund
the transaction with existing cash. The acquisition is expected to
be modestly accretive to Boeing's earnings in 2007 and have an
immaterial earnings impact in 2006.
With approximately 1,000 employees, Aviall is the world's
largest independent provider of new aviation parts and related
aftermarket services. Aviall markets and distributes products for
approximately 220 manufacturers and offers approximately 700,000
Aviall also offers a full line of aviation batteries, hoses,
wheels and brakes, and paint services.