BE Aerospace strategic options

On May 5th, BE Aerospace announced it was exploring strategic alternatives that could involve a sale of the company or one of its units.

Since then, there has been some discussion on who could be targeting BE Aerospace as described in Reuters article

Here, we would like to go over the different potential buyers, their financing capabilities and BE Aerospace strategic fit.

The potential buyers can be separated in 3 categories: ‘big’ Tier 1 suppliers ( United Technologies, Honeywell & SAFRAN), Aircraft OEMs (Airbus & Boeing) and direct BE Aerospace competitors (mainly Zodiac for cabin & WESCO Aircraft for distribution).

Please find at end of article some details of analysis results.

Overall, in case of global sale of BE Aerospace, main candidates are UTC & Honeywell with a preference for Honeywell as it is eyeing acquisitions in Aerospace and UTC made a huge acquisition already last year with Goodrich (~13 B$) -and also purchased RR share in IAE (1.5 B$). In case of separate sale of Cabin & Distribution business, it is difficult to see other candidates except Aircraft OEMs for distribution business. For competitors as Wesco & Zodiac, such an acquisition would completely transform its balance sheet dramatically increasing debt & leverage ratios which seems unlikely at this stage.

 

Financial   capability

Strategic   fit

Comments

Financing

M&A   strategy

Synergies

Market   (increased) access

Tier 1   suppliers

United   Technologies

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UTC has already cabin interior business   and oxygen systems as well.
UTC Aerospace has made huge acquisition last year (Goodrich) and seems   focused on execution and internal growth at present

Honeywell

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HON does not have cabin interior   business.
HON is eyeing >10B$ acquisitions till 2018 in mechanical components &   differentiated technos.

General   Electric

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GE Aviation business focuses on engines,   systems & services which does not seem to fit with cabin interior   business but seems to fit with distribution. However, GE is focusing on   Alstom as mega-acquisition. It would seem difficult for GE to make another   bid for BE Aerospace at this stage. Should Alstom deal not happen, then this assessment   should be renewed.

Safran

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SAFRAN acquisition policy is to   accelerate or establish positions in critical areas at justified price.
SAFRAN’s net debt today is at ~ 1 B€ and SAFRAN is focusing on propulsion and   aircraft systems around electrical aircraft: cabin interiors &   distribution do not seem core to their strategy.

Aircraft   producers

Airbus

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Airbus or Boeing would not purchase   cabin interior business company serving equally both manufacturers.
As services are becoming the name of the game, distribution business could be   of interest.

Boeing

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BE   Aerospace competitors

Zodiac  

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Zodiac financing capabilities do not   allow for BE Aerospace acquisition (total or cabin business)

Wesco

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WESCO could be interested in   distribution business but it completed HAAS acquisition in 2012. In addition,   BE distribution business is WESCO’s size& acquisition would completely   transform balance sheet

 

 

 

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