The planned re-acquisition of Spirit AeroSystems by Boeing is now under review by the UK’s Competition and Markets Authority (CMA). The antitrust investigation into the merger will examine if the transaction raises the risk of a substantial lessening of competition in the UK. The CMA has decided to launch an inquiry and will make a decision within 60 days. This move comes nearly a year after the definitive agreement between the parties was agreed, in a transaction of cash and debt of about $8.3 billion. Spirit AeroSystems manufacturers all of the fuselages for the Boeing 737 MAX. The UK CMA is involved because Spirit owned the former Shorts facilities in Belfast, Northern Ireland, as well as a facility at Glasgow’s Prestwick airport in Scotland. The merger was announced on July 1st, 2024 in an all-stock transaction valued at $4.7 billion, along with an absorption of debt that brings the transaction value to $8.3 billion. A spokesperson for Spirit indicated that the CMA inquiry “was anticipated and is part of the normal process for acquisitions of this nature.” Nonetheless, with almost a year from the announcement, the CMA took the review action quite late in the process. A Complicated Web One of the issues is that Spirit is also a supplier to Airbus, producing components for the A220, A320 and A350 aircraft families. Airbus will acquire assets impacting their programs from Boeing and the parties entered into an agreement in April, 2025. Airbus will take over sites in Northern Ireland, North Carolina, St. Nazaire, Casablanca, Kansas, and Prestwick. Spirit is losing money on Airbus operations and is paying $439 million to divest those operations, subject to adjustments at closing. The Bottom Line The Prestwick site suppliers both Airbus and Boeing, and an independent third party is being sought to acquire that operation. That site may be problematic for British regulators examining the competitive impact of the transaction. A third party solution would be preferred by regulators, but to date no suitable independent third party has been found. With the divestiture of Spirit operations to Boeing and Airbus, that concentrates additional economic activity for the aircraft with the two largest players, increasing concentration. The counterbalancing argument is that they are likely the only players who could come in to rescue Spirit and to avoid a shutdown of aircraft manufacturing at both OEMs if Spirit fails. Having cleared other reviews, it is likely that the merger will take place. The UK inquiry, however, may bring additional pressure to fully address outstanding issues in Northern Ireland and Prestwick that remain unclear, and force the parties to accelerate their processes.
