TransDigm To Buy McKechnie For USD$1.27 Bln

September 28, 2010

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Aircraft parts maker TransDigm said it will buy rival McKechnie Aerospace for USD$1.27 billion in cash in its biggest ever acquisition as it looks to beef up its aftermarket presence.

McKechnie Aerospace, controlled by private equity firm JLL Partners, makes parts for aircraft such as the Boeing 787, Airbus A380 and A350 and is expected to generate more than USD$300 million in revenue this year.

"This is the first sizeable acquisition opportunity that we have seen in the last three or four years," chief executive Nicholas Howley said in a statement.

The deal comes months after JLL, which had acquired McKechnie in 2007 for USD$855.6 million, put the company on the block for an auction sale that reportedly attracted several buyers including Carlyle Group and Precision Castparts.

TransDigm's products include actuators and controls, ignition systems, audio systems and cockpit security devices, while McKechnie makes fasteners and latching systems and sensor rods.

About 60 percent of TransDigm's business comes from aftermarket sales, while OEMs account for 40 percent of sales. McKechnie's business mix is roughly the opposite.

McKechnie, which has 1,500 employees, mainly serves the commercial aerospace market.

TransDigm said it will finance the acquisition primarily through a combination of senior and subordinated debt.

This will bring TransDigm's total debt to about USD$3 billion.

"Absent any additional acquisitions or other capital market actions, TransDigm should begin to de-lever relatively quickly," the company said in a statement.