Ohio-based TransDigm acquires Cobham Aero Connectivity
By Terry Troy
TransDigm Group, a publicly traded aerospace manufacturer headquartered in Cleveland, has agreed to acquire Cobham Aero Connectivity for approximately $965 million in cash plus tax benefits. TransDigm also provided an update on previously announced plans to divest a select number of defense-oriented manufacturing units that were acquired as a part of its earlier Esterline acquisition.
Transdigm Group, through its wholly-owned subsidiaries, is a leading engineer, designer and manufacturer of highly engineered aircraft components in use on nearly all commercial and military aircraft in service today.
Headquartered in Marlow, UK, Cobham Aero Connectivity (CAC) is a leading manufacturers of highly engineered antennas and radios for the aerospace end market. The products are primarily proprietary with significant aftermarket content and have a strong presence across major defense platforms as well as select commercial applications.
“We are pleased to announce the acquisition of Cobham Aero Connectivity. This business fits well with our long-standing strategy,” said W. Nicholas Howley, TransDigm’s Executive Chairman. “The CAC products are almost all proprietary and over 70% of CAC’s revenue comes from the aftermarket. The Company is primarily a defense business. The businesses we are considering for divestiture are also good businesses, but do not fit as well with our long-standing proprietary and aftermarket strategy.”
“We are excited about the acquisition of Cobham Aero Connectivity. The Company has established positions across a diverse range of new and existing aircraft platforms,” added Kevin Stein, TransDigm’s president and CEO. Major customers include Airbus, Boeing, Raytheon Technologies, AgustaWestland/Leonardo and Elbit.
“We also see significant opportunity for ongoing upgrade and retrofit activity as the demand for faster and more data intensive communication continues. As with all TransDigm acquisitions, we expect the CAC acquisition to create equity value in-line with our long-term private equity-like return objectives.”
CAC is expected to generate approximately $225 million in revenue in 2020. Nearly 60% of CAC’s revenue is derived from international sales, and the Company has a strong presence across a diverse range of both helicopters and fixed wing aircraft. The Company operates from two primary facilities in Marlow, UK and Prescott, Arizona. CAC employs approximately 760 people.
The acquisition, which is expected to close during the first calendar quarter of 2021, is subject to regulatory approvals and customary closing conditions. The acquisition is expected to be financed through existing cash on hand.
The operating units under consideration for potential divestiture were acquired by TransDigm in March 2019 as part of the Esterline Technologies acquisition. Since the acquisition, these businesses have functioned as independent operating units under TransDigm’s ownership. These operating units primarily serve the defense end market and have combined annual revenue of $250 to $300 million. TransDigm is now working with outside advisors to assist in the process of identifying and approaching potential buyers. At this time, the timeline for any announced divestitures remains uncertain.