Boeing [BA] on Monday said it has agreed to acquire the commercial operations of the Spirit AeroSystems [SPR] that support its programs and additional commercial, defense and aftermarket operations, in an all-stock transaction valued at $4.7 billion.
Only 13 percent of Spirit’s $6 billion in sales in 2023 were defense and space related, and most of that, 75 percent, is with Boeing for work on programs such as the Navy’s P-8 submarine hunting aircraft, the Air Force’s KC-46 aerial refueling tanker, the B-52 bomber, and KC-135 aerial refueling tanker.
Spirit, which is based in Wichita, Kan., overall generated 64 percent of its sales to Boeing and 19 percent to
Airbus, most of the work being commercial-related. Other Spirit customers include Lockheed Martin [LMT], Northrop Grumman [NOC], Textron [TXT], Canada’s Bombardier, and Britain’s Rolls-Royce.
In addition to supporting certain Boeing military aircraft programs, Spirt also supplies aerostructures, rocket motor parts, fabrication, assembly and other services for classified programs, the Lockheed Martin’s CH-53K helicopter, Textron’s Future Long Range Assault Aircraft, the Common Hypersonic Glide Body being developed by Leidos [LDOS], Northrop Grumman’s B-21 stealth bomber, NASA’s Mars Sample Return and Mars Rover, the Trident D-5 submarine-launched ballistic missile, Standard Missile, Patriot Missile, Terminal High Altitude Area Defense missile interceptor, and unmanned aerial systems.
Boeing expects the acquisition to add about $1 billion in annual sales from new commercial, defense, and aftermarket operations. Overall, in 2023 Spirit did $789 million in defense and space, and $373.9 million in aftermarket sales, respectively.
Boeing and Spirit in early March disclosed that they were discussing a potential deal. Including Spirit’s net debt, the enterprise value of the transaction is $8.3 billion. The acquisition is expected to close in mid-2025 and is subject to Spirit selling to Airbus operations related to the European aerospace and defense contractor, and approvals by regulators and Spirit shareholders. Spirit’s board has approved the sale to Boeing and a binding term sheet with Airbus.
Boeing is acquiring Spirit to improve safety and quality in a key part of its commercial supply chain. In 2005, Boeing sold its Wichita and Oklahoma operations, which became Spirit AeroSystems. In 2006, Spirit acquired BAE Systems aerostructures business, which supplies to Airbus.
“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly, Boeing President and CEO Dave Calhoun said in a statement. “By reintegrating Spirit, we can fully align our commercial production systems, including our safety and quality management systems, and our workforce to the same priorities, incentives and outcomes, centered on safety and quality.”
Pat Shanahan, president and CEO of Spirit and a former senior executive with Boeing, is a potential candidate to succeed Calhoun, who is retiring at the end of 2024.
Spirit shareholders will receive $37.25 per share in Boeing’s common stock for each of their shares in Spirit’s common stock, a 30 percent premium to the closing price of Spirit’s stock on Feb. 29, the day before the companies announced they were discussing a deal.
If the agreement is terminated, Spirit will pay Boeing a $150 million fee.
Boeing’s lead financial adviser on the deal is PJT Partners, with Goldman Sachs & Co., and Consello serving as additional advisers. Morgan Stanley is Spirit’s lead financial adviser with Moelis & Company assisting.