Albany International said it will acquire Harris Corporation's composite aero-structures division for a total consideration of $210 million including the assumption of a $23 million capital lease.
An Albany International press release added that earlier in 2015, Harris had acquired the division through its acquisition of Exelis Inc.Albany International said it will acquire Harris Corporation's composite aero-structures division for a total consideration of $210 million including #
The composite aero-structures division is a leading supplier of advanced composite products primarily for airframe applications.
It has significant positions on three major growth platforms; Lockheed's Joint Strike Fighter (JSF), Boeing's 787, and Sikorsky's CH-53K.
It also supplies the vacuum waste tanks for most of Boeing's 7-Series aircraft, and components of the airframe of a Lockheed Martin family of air-to-surface missiles.
“Additionally, it has small positions on the airframes of the Airbus A350 and 380, and on Genx engines,” Albany International informed.
The acquisition is projected to be slightly accretive to Albany earnings in 2016, with projected 2016 sales in the $80 million to $90 million range and adjusted EBITDA in the $13 million to $15 million range.
According to Albany, sales and adjusted EBITDA are expected to rise sharply through early next decade with the anticipated ramp-up of the JSF, 787, and CH-53K programs.
“Assuming good execution and no significant slippage in program schedules, sales are projected to exceed $200 million by 2020, and adjusted EBITDA margins could approach 20 per cent by 2020,” it observed.
“Subject to these assumptions, the company's estimated return on invested capital for the acquisition is projected to exceed Albany's current cost of capital by 2018 and reach double-digits by 2020,” Albany noted.
CEO Joe Morone said, “The combination of AEC and this aerostructures division creates a major force in aerospace composites, which should be able to realise significant new long-term growth opportunities.”
“We see compelling and multiple forms of complementarity, all of which point to opportunity for additional growth late this decade and into next decade,” he too added.
Albany will use existing cash on hand and its revolving credit facility to finance the transaction and in connection with the transaction, will increase its existing revolving credit facility from $400 million to $550 million.
The transaction, which is conditional on regulatory and other customary conditions, is expected to be completed by the end of the first quarter or early second quarter of 2016. (AR)
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