Precision Castparts Corp. [PCP] on Sunday said it has agreed to acquire Primus International for $900 million in cash in a move to significantly expand its position supplying aerostructures to original equipment manufacturers and Tier 1 supplier in the aerospace industry.
The transaction is expected to close in the third quarter of 2011. Primus is currently held by the private equity firm Oak Hill Capital Partners.
Primus’ sales were not disclosed, but the company has about 1,500 employees and does about 70 percent of its business supplying structures for large aircraft built by Boeing [BA] and the Airbus division of European Aeronautic Defence and Space Co. About 5 percent of Primus’ business is for business jets, a growing market for the company.
Primus does a small amount of defense-related work.
Precision Castparts currently has between $150 million and $200 million in annual sales for aerostructures and a company spokesman said that Primus’ sales here are larger.
Primus’ components and assemblies include swaged rods, advanced composites, and machined aluminum and titanium components.
“Moving deeper into metallic and composite airframe applications is a natural strategic evolution for PCC, and Primus offers the right platform to build from,” Mark Donegan, Precision Castparts’ chairman and CEO, said in a statement. “Primus offers much o the same opportunity that we saw with SPS Technologies–strong technical and market knowledge, first-class assets and manufacturing capabilities, and a solid market position to build from.”
No financial adviser was used on the deal. A spokesman for Precision Castparts said the company had been eyeing Primus for a while but waited until it had a better idea about the current cycle in the commercial aerospace market, particularly Boeing’s new passenger plane the 787, which is about to enter production.
Primus’ management team will remain with the company. Precision Castparts expects the deal to be immediately accretive to earnings.