News emerged today that Boeing entered a definitive agreement to acquire KLX Inc. to enhance its growing services business. The agreement comprises an all-cash transaction for $63 per share and the assumption of approximately $1bn of net debt, totaling $4.25bn. Boeing’s acquisition of KLX Inc. will include KLX Inc.’s Aerospace Solutions Group and is conditional upon the successful divestment and separation of KLX Inc.’s Energy Services Group.
KLX Inc. is a major independent provider of aviation parts and services in the aerospace industry. Its capabilities include global parts distribution and supply chain services for aerospace and defense industries worldwide. KLX Inc. will be part of Boeing Global Services and fully integrated with Aviall. KLX Inc. is also a leading supplier of chemical composites, with this combination broadening the scope of what Aviall can offer to customers in this space.
“This acquisition is the next step in our services growth strategy, with a clear opportunity to profitably grow our business and better serve our customers in a $2.6 trillion, 10-year services market,” said Stan Deal, president, and CEO of Boeing Global Services. “By combining the talent and product offerings of Aviall and KLX Inc., we will provide a one-stop-shop that will benefit our supply chain and our various customers in a meaningful way.”
KLX Inc.’s Aerospace Solutions Group employees and operations will be integrated with Aviall, providing a clear path for the business to accelerate growth. The Miami facilities are expected to continue to remain the principal operating location.
“Our customers have long desired a supplier who could offer essentially 100 percent of their requirements for fasteners, consumables, and expendables. The combination of Aviall and KLX Aerospace facilitates the broadest scope of parts and products to support all customer fleet types for the commercial, military and defense and business and general aviation markets,” said Amin Khoury, KLX Chairman, and CEO. “This business combination will enable us to deliver industry-leading value-added service solutions for our customers, and outstanding growth opportunities for our suppliers.”
The completion of the transaction is subject to customary conditions, including regulatory clearance and the approval by a majority of KLX Inc. shareholders. The sale is expected to close by 3Q 2018. The transaction is also subject to the successful divestment and separation of KLX Inc.’s Energy Services Group.
With approximately 2,000 employees, KLX Inc.’s Aerospace Solutions Group is headquartered in Miami with customer service centers located in more than 15 countries. As a major independent provider of new aviation parts and related aftermarket services, KLX Inc. markets and distributes products for approximately 2,400 manufacturers and offers approximately 1 million catalog items.
This move demonstrates that Boeing will buy the companies that can help grow Boeing Global Services to level desired. As Boeing starts the process of cherry picking, you can be certain that Airbus will consider the same moves to protect its own supply chain and services business. Economies of scale dictate that both OEMs seek ways to de-risk their rising production plans. This means that supply chain firms that play a role in enabling the de-risking are being eyed as acquisitions. Wait for the next shoe to drop.
Oh oh spaghettios the price of aircraft fasteners will be going up!