TransDigm Group Inc. is set to purchase all of the outstanding shares of common stock of Esterline Technologies Corp. for $122.50 per share in cash, or a total transaction value of approximately $4 billion including the assumption of debt. The transaction has been approved by the boards of directors of both companies. TransDigm expects the acquisition to be financed primarily through cash on hand and the incurrence of new term loans, and currently anticipates the acquisition to be modestly accretive to TransDigm's adjusted earnings per share within the first year of ownership. The acquisition of Esterline expands TransDigm's platform of proprietary and sole-source content for the aerospace and defense industries, including significant aftermarket exposure. Headquartered in Bellevue, Washington, Esterline is an industry leader in specialized manufacturing for these sectors with anticipated fiscal year 2018 revenue of approximately $2 billion. Esterline has attractive platform positions in both the OEM and aftermarket, and has substantial content on many important commercial aircraft variants, many regional and business jet aircraft, and major defense platforms. The company consists of 28 business units organized across eight platforms to deliver specialty aerospace, defense and industrial products. It has more than 12,500 employees in more than 50 operating locations throughout the world. TransDigm's Executive Chairman W. Nicholas Howley said in a statement, "Esterline's core aerospace and defense business consists of primarily proprietary, sole source products with significant and growing aftermarket exposure. We view this as highly complementary to our existing business. We are confident that the combination of Esterline's leading positions and our proven track record of driving performance will enable us to deliver the private equity-like returns our investors have come to expect from this investment." The acquisition will be financed through a combination of existing cash on hand of approximately $2 billion and the incurrence of new term loans. TransDigm has obtained commitments for the full amount of financing required for the transaction. Immediately upon closing, the combined company will maintain the financial flexibility to meet any anticipated operating, acquisition, and other opportunities that may arise though a combination of cash on hand, undrawn revolver and under certain circumstances, additional availability under its credit agreement. Bob Henderson, TransDigm's vice chairman, will oversee the integration and operations of Esterline. The transaction is subject to customary closing conditions, including Esterline stockholder approval and the receipt of required regulatory approvals. The companies expect to complete the transaction in the second half of 2019.
