Metal components and products maker Precision Castparts Corp. (PCP) agreed Sunday to acquire aerospace component supplier Primus International from private equity firm Oak Hill Capital Partners for $900 million in cash. The deal, which is subject to regulatory approvals, is expected to close in the second quarter of fiscal 2012.
"The acquisition of Primus clearly demonstrates our focused pursuit of component manufacturing businesses that align with our core competencies. Primus has assembled a group of world-class manufacturing assets, both through acquisition and greenfield construction," Precision Chairman and CEO Mark Donegan said in a statement.
Oak Hill Capital acquired Bellevue, Washington-based Primus International in June 2006. Primus is a leading Tier II supplier of highly engineered metallic and composite parts, kits, and assemblies to the global aerospace industry. Primus' customers include Boeing Co. ( BA) and Airbus.
"Since our acquisition of Primus in 2006, we have worked closely with Jim Hoover, CEO of Primus, and the entire management team to grow the company into a premier aerospace supplier. By investing in new capabilities, technologies and a unique global manufacturing operation, we have successfully built Primus into a strategic supplier for the world's best aerospace companies," said Michael Warren, a Principal of Oak Hill Capital.
The acquisition of Primus will help Precision move deeper into metallic and composite airframe applications, and to grow aggressively in aerostructures. This follows its acquisitions last month to strengthen its forging operations.
Precision noted that Primus has focused on enhancing its capabilities and leveraging its customer interface to increase penetration on key aircraft platforms, particularly Boeing's 737, 777 and 787 and Airbus' A320, A330 and A350, and has strongly positioned the company for the upcoming production ramps.
Following the closure of the deal, Primus will continue to be led by Jim Hoover and its management team. Precision stated that the acquisition of Primus will be immediately accretive to its earnings.
Portland, Oregon-based Precision Castparts makes large, complex structural investment castings, airfoil castings, and forged components used in jet aircraft engines and industrial gas turbines. The company also produces highly engineered, critical fasteners for aerospace and other general industrial markets, and supplies metal alloys to the casting and forging industries.
Last month, Precision Castparts agreed to buy the Rollmet product line of Rockwell Collins Inc. (COL) and also KLAD Manufacturing, both of which will be part Precision's Energy Products Group, which was formed in 2010 to leverage certain manufacturing assets of the company's Forged Products segment.
These acquisitions followed Precision's agreement earlier in June to acquire the Tru-Form rings operations of Unison Engine Components from GE Aviation, an operating unit of diversified conglomerate General Electric Co. (GE).
PCP closed Friday's regular trading session at $162.79, down $1.39 or 0.85 percent on a volume of 1.22 million shares, higher than the three-month average volume of 0.77 million shares. In the past 52-week period, the stock has been trading in a range of $105.61 to $171.43.
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