US planemaker company Boeing will acquire Spirit Aerosystems in an all-stock transaction, with an equity value of USD 37.25 per share. This would value Spirit Aerosystems at an estimated USD 4.7 billion.
By: Yu Le
Published on: 4 July 2024, 9.57pm (GMT +8)
Boeing will buy Spirit Aerosystems at a value of USD 8.3 billion. Photo: Boeing
On July 1, Boeing announced that they would be acquiring Spirit Aerosystems in an all-stock transaction. This will be at an equity value of around USD 37.25 per share, valuing Spirit Aerosystems at around USD 4.7 billion. Boeing will be acquiring Spirit Aerosystems at a transaction value of around USD 8.3 billion, which takes into account Spirit’s last reported net debt. This is part of Boeing’s efforts to step up its quality and safety control measures over the manufacturing of its planes.
David Calhoun, the current CEO and President of Boeing who is set to step down at the end of the year, said in a statement:
“[Boeing] believe[s] 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.”
He also mentioned that the merger allowed for the alignment of their commercial production systems, including their safety and quality management systems, as well as their workforces with the same priorities, incentives and outcomes, which will all be centred around safety and quality.
In a separate statement by Airbus, the European manufacturer will take over certain parts of Spirit Aerosystems, which produce parts for them. The planemaker will acquire facilities that produce A350 fuselage sections in Kingston, North Carolina, and St Nazaire in France. Additionally, it will also buy the production of A220 wing and mid-fuselage in Belfast and Casablanca, and the manufacturing of A220 pylons in Kansas. However, this deal is still a “binding sheet agreement” as of now and much work remains to be done for a definitive deal to come out. The deal is also still subject to regulatory approval.
The acquisition of Spirit Aerosystems and Boeing comes at a time when Boeing faces intense scrutiny by both the authorities and the public for increasing shortcomings in quality control of their planes. Boeing is now facing criminal charges for fraud over 2 fatal 737 MAX 8 crashes in 2018 and 2019. Just at the start of 2024, a door plug from an Alaska 737 MAX 9 was blown off the plane due to improper drilling of screws by employees of Spirit Aerosystems. The company is also coming under the spotlight as it plays a major role in the many instances of poor safety and quality processes in the manufacturing of Boeing aircraft. Spirit Aerosystems manufactures the majority of the parts of the Boeing 737.
Spirit Aerosystems was formed in 2005 when Boeing divested its Wichita and Oklahoma sites. The company still serves a major part of Boeing’s operations and currently manufactures the fuselage, wings, engine nacelles and pylons of the 737 MAX family for Boeing. Spirit is also a large supplier to Boeing’s European rival Airbus.
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