Communications and aviation electronics maker Rockwell Collins, Inc. (COL) agreed Sunday to acquire flight systems company Arinc, Inc., a portfolio company of private-equity giant Carlyle Group (CG), for $1.39 billion. The transaction is expected to close upon receipt of regulatory approvals and other customary conditions.
"Strategically, this acquisition is a natural fit for Rockwell Collins. It accelerates our strategy to develop comprehensive information management solutions by building on our existing information-enabled products and systems and ARINC's ground-based networks and services to further expand our opportunities beyond the aircraft," Rockwell Collins President and CEO Kelly Ortberg said in a statement.
Annapolis, Maryland-based Arinc is a leader in communications and information processing solutions for the commercial aviation industry. The company is line to generate 2013 revenues in excess of $600 million.
Arinc provides solutions to the entire aviation eco-system, including pilots, operators, maintenance, passengers, controllers, regulators, security, and airport operations. It also Arinc provides solutions for rail, industrial security and public safety segments.
"Rockwell Collins' expertise in managing information on-board the aircraft, coupled with our innovative and reliable air to ground communications services, will be instrumental in providing new integrated information management solutions for our customers," Arinc Chairman and CEO John Belcher stated.
The deal is expected to be earnings per share accretive once certain transaction and integration costs have been incurred. The deal will also change Rockwell Collins' business mix to about 54 percent commercial business and 46 percent government business after the closure of the deal.
The deal will boost Rockwell Collins' offerings outside avionics and cockpit technologies. It will also add Arinc's high-integrity aviation networks and services to Rockwell Collins' portfolio of offerings in avionics and cabin technologies.
"ARINC's strong customer base, high customer retention rates and subscription business model will help the company achieve accelerated growth and benefit from greater earnings consistency throughout the commercial aviation business cycle," Ortberg added.
Meanwhile, Ortberg has just taken over the additional role of CEO on August 1 following the resignation of Clay Jones that was announced in mid-April along with the company's second quarter financial results. Ortberg joined the company in 1987, and became the President in 2012.
Jones resigned after a near 34 year career with the company and will remain on the company's board as non-executive chairman.
COL closed Friday's regular trading session at $74.42, down $0.22 or 0.29% on a volume of 0.57 million shares.
by RTT Staff Writer
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