Boeing confirmed the acquisition of parts distributor KLX for $4.25 billion to enhance its growing services business. The agreement comprises an all-cash transaction for $63 per share and the assumption of approximately $1.0 billion of net debt, totalling $4.25 billion.
Boeing’s acquisition of KLX will include its Aerospace Solutions Group, and is conditional upon the successful divestment and separation of KLX’s Energy Services Group.
KLX 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 will be part of Boeing Global Services and fully integrated with Aviall.
KLX is also a leading supplier of chemical composites, which broadens the scope of Aviall’s customer solutions.
“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’s Aerospace Solutions Group employees and operations will be integrated with Aviall and 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.”
KLX’s Aerospace Solutions Group FY2017 revenue was $1.4 billion. Boeing expects the acquisition to have a neutral earnings impact through 2019 and accretion thereafter, with annual cost savings growing to approximately $70 million by 2021 and further improvements realized over time. The transaction will be financed primarily with cash on hand, supplemented with debt.
The completion of the transaction is subject to customary conditions, including regulatory clearance and the approval by a majority of KLX shareholders. The sale is expected to close by 3Q 2018. The transaction is also subject to the successful divestment and separation of KLX’s Energy Services Group.