Héroux-Devtek to focus on its core landing gear ops with sale of Aerostructure and Industrial product linesWritten by Rob Colman July, 17 2012
LONGUEUIL, QC - Héroux-Devtek Inc. today announced that it has executed a definitive agreement for the sale of substantially all of its Aerostructure and Industrial Products operations to Precision Castparts Corp. for C$300 million in cash, subject to post-closing adjustments. Héroux-Devtek expects to realize net cash proceeds of approximately C$230 million from the sale, after related taxes and expenses. Going forward, the Corporation will focus on growth opportunities in its core Landing Gear operations, leveraging its market-leading position in the sector.
The transaction, which has been unanimously approved by Héroux-Devtek's Board of Directors, is expected to close in the second quarter of the current fiscal year and is subject to customary regulatory approvals and other approvals for this type of transaction. The transaction is not subject to shareholders' approval.
Assets to be acquired by Precision Castparts Corp. include Héroux-Devtek's Dorval (Quebec), Querétaro (Mexico) and Arlington (Texas) Aerostructure manufacturing sites, as well as the Cincinnati (Ohio) Industrial Products manufacturing sites. The assets to be sold generated sales of approximately $130 million for the fiscal year ended March 31, 2012.
Following the closing of the transaction in the second quarter of the current fiscal year, the Corporation will retain all of its Landing Gear design engineering and manufacturing capabilities that have allowed it to set the industry standards on various platforms over the years and will have more than 1,000 employees in Canada and the U.S. The pro forma entity has revenues of more than $250 million.
"The sale of the Aerostructure and Industrial Products operations represents an opportunity to crystallize substantial value for our shareholders and allows Héroux-Devtek to focus on its core Landing Gear operations", said Mr. Claude Boivin, Chair of the Corporation's Special Committee which is overseeing the transaction. "We have evaluated and continue to evaluate attractive opportunities for the Corporation and will consider the most effective and efficient options for distribution and redeployment of proceeds from the transaction. "
Mr. Gilles Labbé, President and CEO of Héroux-Devtek, said: "We believe this transaction generates significant value for our shareholders. More importantly, we will continue to create value going forward as a publicly-traded corporation through a combination of organic growth and acquisition initiatives in the landing gear market, as we leverage our core strengths and leading position. Several exciting growth opportunities are available to Héroux-Devtek and our stronger financial position following this transaction will position us favourably to further expand our landing gear market penetration. Our vision continues to build the Corporation into a Quebec-based, world-class organization in this core market."
Labbé continued: "Precision Castparts is a worldwide, diversified manufacturer of complex metal components and products. They are highly anticipating the inclusion of the dedicated Héroux-Devtek Dorval, Arlington, Querétaro and Cincinnati employees, who I warmly thank for contributing to our success, into their business to continue executing their growth strategy. As such, this is a "win-win" transaction for all parties involved."
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