B/E Aerospace shares soar after deal
Wellington firm’s stock rises 16 percent in first day of trading since $6.4 billion buyout was announced.
WELLINGTON — Shares of B/E Aerospace soared Monday after the company announced it would be sold to a larger rival.
In a marriage of suppliers to airlines, Rockwell Collins Inc. of Cedar Rapids, Iowa, said Sunday it will pay $6.4 billion, a 22.5 percent premium over B/E Aerospace’s closing stock price on Friday. Wellington-based B/E Aerospace makes seats and bathrooms for airplanes.
Shares of B/E Aerospace (Nasdaq: BEAV) rose 16 percent Monday. Rockwell Collins (NYSE: COL) fell 5 percent. Even before Monday’s increase in share value, B/E had been a solid performer in 2016, up 21 percent through the first nine months of the year.
Local economic developers lamented the possible loss of the headquarters of a large publicly traded company. Among Palm Beach County companies, B/E Aerospace’s $6 billion market value trails only NextEra Energy of Juno Beach and SBA Communications of Boca Raton.
“B/E Aerospace has been at the top of the list as one of our bragging points, so we’d hate to lose the headquarters,” said Kelly Smallridge, president of the Business Development Board of Palm Beach County.
Smallridge said she reached out to officials from both companies but had not heard back as of Monday afternoon.
B/E Aerospace doesn’t disclose how many employees it has in Palm Beach County. The company employed some 10,000 workers worldwide at the end of 2015, mostly at factories spread across the United States, Europe and the Philippines.
Rockwell Collins said it also would assume $1.9 billion of debt owed by B/E Aerospace.
Investment titans BlackRock Inc. of New York and The Vanguard Group of Malvern, Pa., were the company’s largest shareholders as of April, the company told regulators. The largest individual shareholder is Executive Chairman Amin Khoury, whose 236,214 shares were worth $13.8 million as of Monday afternoon.
The stock and cash deal needs approval by shareholders of both companies and by regulators. It is expected to close next spring.
Raymond James analyst Harry Breach said the sale added to a slowly rising number of deals in the aerospace industry, includ- ing recent Rockwell acquisitions to add expertise in in-flight connectivity and entertainment. Still, Breach said, despite expected cost savings from combining Rockwell and B/E, “we cannot clearly see the strategic synergy here.”
Cowen and Co. analyst Cai von Rumohr called the deal “a good fit” but “a bit pricey.” He said B/E’s strong relationships with airline customers would complement Rockwell’s strength with business jet and military customers.
Rockwell said the deal will save about $160 million in overlapping spending and boost earnings per share within a year. If the deal is completed, Rockwell will have nearly 30,000 employees and about $8 billion in annual revenue.