Textron To Buy Beech Holdings For About $1.4 Bln

Textron To Buy Beech Holdings For About $1.4 Bln

Aircraft maker Beechcraft Corp. said Thursday that industrial conglomerate Textron, Inc. (TXT: Quote) has agreed to buy its parent company Beech Holdings LLC, for about $1.4 billion in cash.

The acquisition of Beech Holdings will enable Textron, the maker of Cessna aircraft and Bell helicopters, to further expand its offering of propeller-powered range of aircraft.

The transaction, unanimously supported by Beechcraft's board of directors, is expected to close during the first half of 2014.

Textron's Cessna already has a wider range of aircraft than any other maker of general aviation aircraft. In 2012, Cessna delivered 571 aircraft, including 181 Citation business jets, and reported revenues of $3.111 billion.

Wichita, Kansas-based Beechcraft is the maker of aircraft such as the King Air turboprops, piston-engine Baron and Bonanza, in addition to the T-6 trainer and AT-6 light attack military aircraft. In business since 1932, Beechcraft has built more than 54,000 aircraft and more than 36,000 continue flying today. The company, with estimated 2013 revenues of $1.8 billion, employs 5,400 people.

Scott Donnelly, Chairman and CEO of Textron said, "The acquisition of Beechcraft is a tremendous opportunity to extend our general aviation business....The iconic King Air product line perfectly complements our Caravan and Citation jet line-up and our combined global service network will deliver the superior level of services expected by our Cessna, Beechcraft and Hawker customers."

Beechcraft, formerly known as Hawker Beechcraft, emerged from Chapter 11 bankruptcy protection in February 2013 after the closure of its Hawker business jet operations. In October, the company hired Credit Suisse in a bid to seek potential buyers for its jet plane business, which has been losing money.

Under the terms of the deal announced Thursday, Textron will acquire the Hawker 4000 and Premier IA type certificates. Beechcraft will continue maintenance services for the aircraft through its factory-owned service center network, Hawker Beechcraft Services, and authorized service centers around the world with Hawker 4000 and Premier ratings. Beechcraft will continue to provide uninterrupted maintenance service and support for all Hawker 4000 and Premier aircraft.

Centerbridge Partners LP, Sankaty Advisors LLC and Angelo, Gordon & Co. took control of Beechcraft following its emergence from bankruptcy and currently own about 90 percent of the company. Holders representing equity interests in Beech Holdings sufficient to approve the transaction have delivered proxies authorizing written consents in favor of the transaction.

The deal includes a customary no-shop provision with exceptions that will allow Beech Holdings to evaluate and, under certain circumstances, accept an unsolicited proposal that is superior to the transaction with Textron. If Beech Holdings accepts a superior offer, it will be liable to pay a termination fee of $48 million to Textron.

Providence, Rhode Island-based Textron said it plans to finance the purchase of the equity as well as cash required for the repayment of Beechcraft's working capital debt through a combination of available cash and up to $1.1 billion in new debt.

Credit Suisse acted as lead financial advisor to Beech Holdings on the transaction and Morgan Stanley also served as a financial advisor. Kirkland & Ellis LLP served as the company's legal advisor to Beech Holdings.

For Textron, J.P. Morgan served as its exclusive financial adviser and is providing committed financing in connection with the acquisition.

TXT closed Thursday's regular trading session at $36.20, up $0.20 or 0.56 percent on a volume of 1.61 million shares. In after-hours, the stock further gained $0.80 or 2.21 percent to $37.00.

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