Boeing agrees to purchase Spirit AeroSystems

[YorkRailFan]

Boeing announced plans to aquire Spirit AeroSystems for $4.7 billion in an all-stock transaction for the manufacturing firm, which already was part of the aerospace company's manufacturing chain.

Boeing, located in Arlington, Virginia, announced the purchase in a statement late Sunday.

The acquisition's equity value of $4.7 billion is $37.25 per share, while the total value of the deal is around $8.3 billion, which includes Spirit’s last reported net debt, the aerospace company said.
Spirit, located in Wichita, Kansas, manufactures key parts for Boeing aircraft. Spirit also announced the acquisition on its website and social media.

“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,” Boeing President and CEO Dave Calhoun said in the statement.Boeing previously owned Spirit and the aerospace company said bringing the supplier back into the Boeing fold would improve plane quality and safety, which has come under increasing scrutiny by regulators, Congress and airlines.

“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," Calhoun said.The purchase of Spirit would reverse a longtime Boeing strategy of outsourcing key work on its passenger planes. That approach has been criticized as problems at Spirit disrupted production and delivery of popular Boeing jetliners including 737s and 787s.

Concerns about safety came to a head after the Jan. 5 blowout of a panel on an Alaska 737 Max 9 at 16,000 feet (4,876 meters) over Oregon. The Federal Aviation Administration soon after announced increased oversight of Boeing and Spirit.

Embattled Boeing agrees to buy longtime supplier Spirit AeroSystems for $4.7bn

The agreement comes as the Department of Justice is set to offer Boeing a plea deal in connection to two deadly crashes

www.independent.co.uk

Airbus is set to purchase Spirit facilities in Northern Ireland, the US, France and Morocco which build components for Airbus aircraft.

https://www.reuters.com/business/aerospace-defense/airbus-says-get-559-mln-compensation-under-spirit-aero-deal-2024-07-01/

Europe's Airbus (AIR.PA), opens new tab on Monday set out the terms under which it plans to buy certain loss-making activities of Spirit AeroSystems (SPR.N), opens new tab as part of a planned wider break-up of the supplier between Airbus and rival Boeing (BA.N), opens new tab.
The deal involves Airbus taking over work at loss-making plants that supply key parts for its A220 and A350 passenger jets.
Airbus will be compensated for agreeing to take on the work by a payment of $559 million from Spirit, while it will pay a nominal sum of $1 for the assets, depending on the final outline of the deal, it said in a statement.

Confirming a Reuters report, it said it would take over activities at four Spirit plants in the United States, Northern Ireland, France and Morocco that carry out work for the A350 and A220 jets. It will also take on minor activities carried out for the A220 in Wichita, Kansas, where Spirit is based.
The agreement is subject to due diligence, Airbus said.

Surprisingly, this list didn't include Spirit's facility in Prestwick, Scotland which produces A350 components.

This entire purchase does raise a lot of questions, what will happen to Spirit's contract with the USAF which is being carried out as a Joint Venture with Bell Helicopters. Spirit is also a supplier for Northrop Grumman.

== Doublepost prevention - post automatically merged: 1 Jul 2024 ==

Airbus SE (stock exchange symbol: AIR) has entered into a binding term sheet agreement with Spirit AeroSystems in relation to a potential acquisition of major activities related to Airbus, notably the production of A350 fuselage sections in Kinston, North Carolina, U.S., and St. Nazaire, France; of the A220’s wings and mid-fuselage in Belfast, Northern Ireland, and Casablanca, Morocco; as well as of the A220 pylons in Wichita, Kansas, U.S.

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.

The transaction would cover the acquisition of these activities. 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.

Entering into definitive agreements remains subject to an ensuing due diligence process. Whilst there is no guarantee that a transaction will be concluded, all parties are willing and interested to work in good faith to progress and complete this process as timely as possible.

Airbus enters agreement with Spirit AeroSystems

Airbus SE has entered into a binding term sheet agreement with Spirit AeroSystems in relation to a potential acquisition of major activities related to Airbus.

www.airbus.com

Boeing [NYSE: BA] today announced it has entered into a definitive agreement to acquire Spirit AeroSystems [NYSE: SPR]. The merger is an all-stock transaction at an equity value of approximately $4.7 billion, or $37.25 per share. The total transaction value is approximately $8.3 billion, including Spirit's last reported net debt.

Each share of Spirit common stock will be exchanged for a number of shares of Boeing common stock equal to an exchange ratio between 0.18 and 0.25, calculated as $37.25 divided by the volume weighted average share price of Boeing shares over the 15-trading-day period ending on the second trading day prior to the closing (subject to a floor of $149.00 per share and a ceiling of $206.94 per share). Spirit shareholders will receive 0.25 Boeing shares for each of their Spirit shares if the volume-weighted average price is at or below $149.00, and 0.18 Boeing shares for each of their Spirit shares if the volume-weighted average price is at or above $206.94.

"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."

Boeing's acquisition of Spirit will include substantially all Boeing-related commercial operations, as well as additional commercial, defense and aftermarket operations. As part of the transaction, Boeing will work with Spirit to ensure the continuity of operations supporting Spirit's customers and programs it acquires, including working with the U.S. Department of Defense and Spirit defense customers regarding defense and security missions.

"We are proud of the role Boeing plays in supporting our men and women in uniform and are committed to ensuring continuity for Spirit's defense programs," said Calhoun.

Airbus SE and Spirit have also entered into a binding term sheet under which Airbus will acquire, assuming the parties entered into definitive agreements and receipt of any required regulatory approvals, certain commercial work packages that Spirit performs for Airbus concurrently with the closing of the Boeing-Spirit merger. In addition, Spirit is proposing to sell certain of its operations, including those in Belfast, Northern Ireland (non-Airbus operations), Prestwick, Scotland, and Subang, Malaysia. The transaction is expected to close mid-2025 and is subject to the sale of the Spirit operations related to certain Airbus commercial work packages and the satisfaction of customary closing conditions, including regulatory and Spirit shareholder approvals.

Boeing to Acquire Spirit AeroSystems

- Demonstrates commitment to aviation safety, improves quality for Boeing Commercial Airplanes - Leverages Boeing enterprise engineering and manufacturing capabilities - Maintains continuity for...

boeing.mediaroom.com

Wouldn't surprise me if Airbus purchases the Prestwick facility Spirit is proposing to sell.

== Doublepost prevention - post automatically merged: 1 Jul 2024 ==

Spirit AeroSystems [NYSE: SPR] (“Spirit”) today announced it has entered into a definitive merger agreement under which The Boeing Company [NYSE: BA] (“Boeing”) will acquire Spirit for $37.25 per share in Boeing common stock (subject to the collar described below). 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. 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.

“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 Patrick M. Shanahan, President and Chief Executive Officer of Spirit. “Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems.”

Spirit also announced today that it entered into a binding term sheet with Airbus SE [EUR: AIR.PA] (“Airbus”). Under the term sheet, the parties will continue to negotiate in good faith to enter into definitive agreements for Airbus to acquire certain Spirit assets that serve Airbus programs, concurrently with the closing of Spirit’s acquisition by Boeing.

Shanahan continued, “We are proud of the part we have played in Airbus’ programs and believe bringing these programs under Airbus ownership will enable greater integration and alignment.”

Under the terms of the definitive merger agreement with Boeing, Spirit shareholders will receive for each of their shares of Spirit common stock a number of shares of Boeing common stock equal to an exchange ratio calculated as $37.25 divided by the volume weighted average share price (VWAP) of Boeing common stock over the 15-trading-day period ending on the second trading day prior to the closing (the “Closing Price”), subject to a floor of $149.00 per share of Boeing common stock and a ceiling of $206.94 per share of Boeing common stock. Spirit shareholders will receive 0.25 shares of Boeing common stock for each of their shares of Spirit common stock if the Closing Price is at or below $149.00, and 0.18 shares of Boeing common stock for each of their shares of Spirit common stock if the Closing Price is at or above $206.94.

The definitive merger agreement with Boeing and the term sheet with Airbus were unanimously approved by the Spirit Board of Directors. The closing under the definitive merger agreement with Boeing is subject to the completion of the divestiture of the Airbus businesses by Spirit and is subject to other closing conditions, including approval of the definitive merger agreement by Spirit shareholders and receipt of regulatory approvals. The closing of the Airbus transaction, if a definitive agreement for the Airbus transaction is entered into with Airbus, will be subject to the substantially concurrent closing of the Boeing acquisition of Spirit and will be subject to other closing conditions, including the receipt of regulatory approvals. The closings of these transactions are expected to occur in mid-2025.

In addition, Spirit plans to pursue the divestiture of certain operations. These include Spirit’s business and operations in (1) Subang, Malaysia, (2) Prestwick, Scotland that support Airbus programs, and (3) Belfast, Northern Ireland other than those that support Airbus programs.

Spirit AeroSystems Announces Acquisition by Boeing in $8.3 Billion Transaction | Spirit AeroSystems

www.spiritaero.com

 

[najaB]

This entire purchase does raise a lot of questions

Understatement of the century.

 

[LNW-GW Joint]

It seems to give Airbus a management headache along with greater control of its supply chain.
I'm particularly interested in how wings manufacture will be managed, with the vast majority of its work being done at Broughton, but now with a second in-house facility in Belfast for the A220.
You'd expect there to be some integration of functions after the deal is done, to reduce costs.
Given the UK's non-EU situation, it will be interesting to see how Airbus manages its supply chain when they wholly own the Belfast site.

 

[YorkRailFan]

It seems to give Airbus a management headache along with greater control of its supply chain.
I'm particularly interested in how wings manufacture will be managed, with the vast majority of its work being done at Broughton, but now with a second in-house facility in Belfast for the A220.
You'd expect there to be some integration of functions after the deal is done, to reduce costs.
Given the UK's non-EU situation, it will be interesting to see how Airbus manages its supply chain when they wholly own the Belfast site.

It's a remnant of when the A220 was the Bombardier C-Series, naturally the Quebec Government would need to be consulted for such a move as they still have a stake in the A220 program.

== Doublepost prevention - post automatically merged: 2 Jul 2024 ==

Bombardier has no plans to exit existing contracts with Spirit despite the takeover:

BOMBARDIER STATEMENT REGARDING AEROSTRUCTURES PRODUCED BY SPIRIT AEROSYSTEMS
Bombardier expects its supply contracts to be maintained to the highest standards of quality and performance. The company remains actively engaged with Spirit as part of ordinary course of business under existing contracts.

Bombardier Statement Regarding Aerostructures Produced by Spirit Aerosystems

Bombardier Statement Regarding Aerostructures Produced by Spirit Aerosystems

bombardier.com

That still leaves Northrop Grumman and Bell (among others) who have remained silent on this topic despite having supplier contracts with Spirit (in the case of the former) or a JV to build a helicopter for the US Air Force (in the case of the latter.)

 

[randyrippley]

It seems to give Airbus a management headache along with greater control of its supply chain.
I'm particularly interested in how wings manufacture will be managed, with the vast majority of its work being done at Broughton, but now with a second in-house facility in Belfast for the A220.
You'd expect there to be some integration of functions after the deal is done, to reduce costs.
Given the UK's non-EU situation, it will be interesting to see how Airbus manages its supply chain when they wholly own the Belfast site.

Leonardo owns the remains of the old Shorts missile business on the Belfast site. I have a feeling they have other interests there as well. Bombardier only purchased the aerostructures business from Shorts

 

[YorkRailFan]

Bell Helicopters is on the hunt for a new supplier following Boeing's acquisition of Spirit:

Following the closure of Boeing’s acquisition of Spirit AeroSystems, Bell is expected to look elsewhere for aerostructures work on its Future Long Range Assault Aircraft for the U.S. Army.

The move, a major shift in the supplier base for military rotorcraft, will either send Bell searching for another structures company to provide fuselages for the V-280—a program that will include at least 400-500 aircraft for the Army before international sales—or prompt the Amarillo, Texas-based company to look at doing the work in-house.

Multiple industry sources say the change will happen once the acquisition closes, expected in mid-2025. Spirit is likely to lay out the impacts of the change to its workforce in the coming weeks.

“Spirit has had a successful, 10-year partnership with Bell on this program and we will continue to work with them to deliver on our joint commitments,” Spirit spokesman Joe Buccino said.

Bell told Aviation Week it is not able to comment on relationships with its suppliers. Boeing declined to comment.

Bringing on Boeing as a supplier for the V-280 would have marked a return to the fraught relationship between the two companies on the V-22 Osprey. Bell and Boeing had a 50-50 teaming agreement for the U.S. Navy-led program, with Boeing building the fuselages. The equal partnership caused issues during development, concerning engineering and cost decisions.

That history led Boeing to avoid a tiltrotor design approach when it pursued the FLRAA plan. Boeing teamed with Sikorsky for the compound rotor SB-1 Defiant. With Bell beating the Sikorsky-Boeing team, Boeing had a chance to return to the FLRAA program through the Spirit acquisition.

While the bulk of the attention of Boeing’s acquisition has been on its commercial fallout, as Spirit builds the fuselage for the 737, some have raised concerns about defense impacts. Sen. Jerry Moran (R-Kan.) said Spirit’s defense work accounts for about 2,000 jobs in his state alone.

“I want to make certain that that work continues in Kansas, but I particularly want to make certain that we do not do anything in this acquisition that diminishes the capability of meeting our defense needs nationwide, or globally, by any kind of pause, any kind of disruption in the supply chain,” Moran says.

Spirit’s defense work accounted for about $789 million in sales in 2023. Other programs include Northrop Grumman’s B-21 Raider and Lockheed Martin’s CH-53K heavy lift helicopter.

“I want to make certain that in this merger—and I don’t know the details of this acquisition—but I want to make certain that companies who do defense with Spirit have a place to do that work, either with Spirit in the future or in Kansas otherwise,” Moran said. “But, setting aside my Kansas hat, our country and the challenges we face and the supply chain issues that we are trying to meet needs to make sure there’s no loss of work—no loss of time in providing the contractual obligations to those other companies.”

Bell, in a July 23 briefing to reporters here at the Farnborough Airshow, said it is awaiting the imminent announcement from the U.S. Army that FLRAA has received Milestone B approval, which will mark the start of engineering and manufacturing development.

Bell Expected To Find New FLRAA Fuselage Supplier After Boeing's Spirit Takeover | Aviation Week

Bell is expected to look elsewhere for aerostructures work on its Future Long Range Assault Aircraft for the U.S. Army.

aviationweek.com

This is a lucrative contract for whichever supplier wins, a lot of companies will have their ears twitching after this statement.

== Doublepost prevention - post automatically merged: 13 Aug 2024 ==

Spirit AeroSystems (SPR.N), opens new tab CEO Patrick Shanahan will receive a payout of $28.5 million after the 737 MAX fuselage supplier completes its merger with Boeing (BA.N), opens new tab, according to a regulatory filing on Monday.
Shanahan will get a cash payment of $2.3 million, converted Spirit restricted stock units worth $26.1 million and perquisites and benefits worth $45,000 as part of a package known as a "golden parachute".

https://www.reuters.com/business/aerospace-defense/spirit-aero-ceo-shanahan-get-285-million-golden-parachute-2024-08-12/

Calling this a "golden parachute" isn't exactly fair considering Shanahan has only been in the role of CEO at Spirit since September 2023 and didn't have time to do much change, additionally the CFO at Spirit has only been in the role since June 2024.