Textron to acquire Beechcraft

Textron Inc. officials announced Dec. 26, 2013, that the company has reached agreement to purchase all outstanding equity interests in Beech Holdings LLC, the parent of Beechcraft Corp., for approximately $1.4 billion in cash.

 

Beechcraft Corp., with estimated 2013 revenues of $1.8 billion, is a manufacturer of business, special mission, AT-6 military light attack, and T-6 trainer aircraft. With more than 36,000 aircraft in service, Beechcraft supports its installed base of Hawker business jets, King Air turboprops, and Beechcraft Baron and Bonanza piston-engine airplanes with an extensive global network of more than 90 company-owned and authorized service centers.

 

“The acquisition of Beechcraft is a tremendous opportunity to extend our general aviation business,” said Textron Chairman and CEO Scott C. Donnelly. “From our customers’ perspective, this creates a broader selection of aircraft and a larger service footprint— all sharing the same high standards of quality and innovation. The iconic King Air product line perfectly complements our Caravan and Citation jet line-up and our combined global service network will deliver the superior level of services expected by our Cessna, Beechcraft, and Hawker customers.”

 

Bill Boisture, CEO of Beechcraft, said “This transaction represents an important step forward in the evolution of Beechcraft’s business. The team at Beechcraft has worked tirelessly to strengthen our core business and to maintain our position as a leader in a highly competitive environment. Textron’s experience in the industry and its willingness to invest in and maintain the iconic Beechcraft brand make it an ideal parent company, one that will help us continue to satisfy our customers and meet our business objectives at a faster pace.”

 

Textron plans to finance the purchase of the equity as well as cash required for the repayment of Beechcraft’s working capital debt through a combination of available cash and up to $1.1 billion in new debt. Holders representing equity interests in Beech Holdings sufficient to approve the transaction have delivered proxies authorizing written consents in favor of the transaction. The transaction was unanimously supported by Beechcraft’s board of directors and is expected to close during the first half of 2014, subject to customary closing conditions including regulatory approvals. The definitive agreement includes a customary no-shop provision with exceptions permitting Beech Holdings to respond to, evaluate and, under certain circumstances, accept an unsolicited proposal that is superior to the transaction with Textron, in which case a termination fee of $48 million will be payable by Beech Holdings to Textron.

 

J.P. Morgan served as exclusive financial adviser to Textron and is providing committed financing in connection with the acquisition.

 

Credit Suisse acted as lead financial advisor to Beech Holdings on the transaction and Morgan Stanley also served as a financial advisor. Kirkland & Ellis LLP served as legal advisor to Beech Holdings on the transaction.

 

Since its emergence from Chapter 11 protection in February 2013, the market has responded positively to the new Beechcraft Corp., according to company officials. The company’s strong aircraft delivery numbers in the first three quarters of 2013 and the securing of its highest booking rates in the past 3 years are evidence of Beechcraft’s renewed growth in the market, the officials noted.

 

Under the terms of the transaction, Textron will acquire the Hawker 4000 and Premier IA type certificates. Maintenance services for the aircraft will continue through Beechcraft’s factory-owned service center network, Hawker Beechcraft Services, and Authorized Service Centers around the world with Hawker 4000 and Premier ratings. Beechcraft will continue to provide uninterrupted service and support for all Hawker 4000 and Premier aircraft.

 

In business since 1932, Beechcraft has built more than 54,000 aircraft and more than 36,000 continue flying today. The company has 5,400 employees and its headquarters and major manufacturing facilities are located in Wichita, Kan.

 

Textron is known around the world for its brands such as Bell Helicopter, Cessna Aircraft Co., Jacobsen, Lycoming, and Textron Systems. 

 

Since its inception in 1927, Cessna has designed, produced and delivered nearly 200,000 airplanes around the globe, including 6,500 Citation business jets. Aircraft sales include Citation business jets, Caravan single-engine utility turboprops, single-engine piston aircraft, and lift solutions by CitationAir. Aftermarket services include parts, maintenance, inspection and repair services.