After two decades apart, Boeing is bringing troubled supplier and manufacturing partner Spirit AeroSystems back under its proverbial roof. The airframer confirmed early this morning that it has entered into a definitive agreement to buy Spirit as part of an all-stock transaction valued at roughly $4.7 billion or $37.25 per share.
When the Boeing-Spirit merger closes, Airbus will acquire certain commercial work packages that Spirit performs for the European airframer, including its operation in Belfast, Northern Ireland.
“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,” said Boeing president and CEO Dave Calhoun.
“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.”
The planemaker has long pursued an outsourcing approach. But its reputation has been hammered in recent years due to quality issues and safety concerns, including around the Boeing 737 MAX, which suffered two fatal crashes in 2018 and 2019, respectively, leading to a worldwide grounding. The jet is also now the focus of a new NTSB investigation after an Alaska Airlines Boeing 737 MAX 9 experienced a mid-air separation of an emergency door plug.
Spirit is one of the world’s largest manufacturers of aerostructures for commercial airplanes, and builds several key parts for Boeing, including 737 MAX fuselages. “Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems,” said Spirit president and CEO Patrick M. Shanahan.
Boeing’s acquisition of Wichita, Kansas-headquartered Spirit will include substantially all Boeing-related commercial operations, as well as additional commercial, defense and aftermarket operations. Boeing said it will work with Spirit to ensure the continuity of operations supporting Spirit’s customers and programs it acquires, including working with the US Department of Defense and other defense customers.
Airbus, meanwhile, has entered into a binding term sheet agreement with Spirit with the aim of acquiring the firm’s major activities related to Airbus, notably including the production of A350 fuselage sections in Kinston, North Carolina and St. Nazaire, France; the A220’s wings and mid-fuselage in Belfast and Casablanca, Morocco; as well as of the A220 pylons in Wichita.
“With this agreement, Airbus aims to ensure stability of supply for its commercial aircraft programmes through a more sustainable way forward, both operationally and financially, for the various Airbus work packages that Spirit AeroSystems is responsible for today,” it said in a statement.
Entering into definitive agreements remains subject to an ensuing due diligence process, Airbus added. But if concluded, Airbus “will be compensated by payment of $559 million from Spirit AeroSystems, for a nominal consideration of $1.00, subject to adjustments including based on the final transaction perimeter”.
For its part, Spirit said the price of $37.25 per share “represents a 30% premium to Spirit’s closing stock price of $28.60 on February 29, 2024, the last day before both Spirit and Boeing issued press releases confirming they were in discussions regarding a potential transaction.”
At $37.25 per share, this represents an equity value of approximately $4.7 billion and an enterprise value of approximately $8.3 billion including Spirit’s last reported net debt.
“After carefully evaluating Boeing’s offer to combine, we are confident this transaction is in the best interest of Spirit and its shareholders, and will benefit Spirit’s other stakeholders,” said Shanahan.
Featured image credited to Boeing
