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Rockwell Collins (COL) Acquires B/E Aerospace for $8.6B
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Rockwell Collins Inc. has closed the transaction to acquire B/E Aerospace Inc. worth $8.6 billion, including assumed debt. In Oct 2016, both the companies had entered into a definitive agreement for the acquisition.
Details of the Deal
With the acquisition, Rockwell Collins now has almost 30,000 employees and expects its annual revenue to be more than $8 billion based on calendar year 2016 results.
B/E Aerospace has been rebranded Rockwell Collins with immediate effect. The former president and chief executive officer of B/E Aerospace, Werner Lieberherr, took up the position of executive Vice President and Chief Operating Officer of Rockwell Collins’ newly created Interior Systems business division. He will now be reporting to Kelly Ortberg, Chairman, President and Chief Executive Officer of Rockwell Collins.
Benefits of the Acquisition
The acquisition will combine Rockwell Collins’ capabilities in flight deck avionics, cabin electronics, mission communications, simulation and training, and information management systems with B/E Aerospace's array of cabin interior products. These products comprise seating, food and beverage preparation, and storage equipment, lighting and oxygen systems, and modular galley and lavatory systems for commercial airliners and business jets.
Additionally, the acquisition is expected to increase the sales of Rockwell Collins’ equipment in the bigger two-aisle planes of The Boeing Co. (BA - Free Report) and Airbus Group SE (EADSY - Free Report) that fly international routes, to almost three times. It is also expected to double the value of the systems that it sells for new single-aisle planes manufactured by the two aircraft behemoths.
The transaction will result in an improvement in Rockwell Collins’ products and expand its product portfolio, customer mix and geographic presence. It is expected to generate run-rate pre-tax cost synergy of roughly $125 million after tax. Nevertheless, by the end of fiscal 2019, the company anticipates to attain 90% of the cost synergies. In the fiscal year 2018, the deal is expected to provide double-digit accretion to the company’s earnings.
Rockwell Collins’ Take on the Merger
According to Ortberg, the transaction marks the combination of two complementary product lines. This will help the company provide better services to the commercial aviation, business jet and military customers through a broader line of offerings and eventually driving long-term, profitable growth and shareowner value.
Price Performance
Shares of Rockwell gained 2.3% over the last 12 months, underperforming the Zacks categorized Aerospace-Defense Equipment industry’s increase of 14.7%. This could have been because of intense competition from peers like HEICO Corporation (HEI - Free Report) .
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
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Rockwell Collins (COL) Acquires B/E Aerospace for $8.6B
Rockwell Collins Inc. has closed the transaction to acquire B/E Aerospace Inc. worth $8.6 billion, including assumed debt. In Oct 2016, both the companies had entered into a definitive agreement for the acquisition.
Details of the Deal
With the acquisition, Rockwell Collins now has almost 30,000 employees and expects its annual revenue to be more than $8 billion based on calendar year 2016 results.
B/E Aerospace has been rebranded Rockwell Collins with immediate effect. The former president and chief executive officer of B/E Aerospace, Werner Lieberherr, took up the position of executive Vice President and Chief Operating Officer of Rockwell Collins’ newly created Interior Systems business division. He will now be reporting to Kelly Ortberg, Chairman, President and Chief Executive Officer of Rockwell Collins.
Benefits of the Acquisition
The acquisition will combine Rockwell Collins’ capabilities in flight deck avionics, cabin electronics, mission communications, simulation and training, and information management systems with B/E Aerospace's array of cabin interior products. These products comprise seating, food and beverage preparation, and storage equipment, lighting and oxygen systems, and modular galley and lavatory systems for commercial airliners and business jets.
Additionally, the acquisition is expected to increase the sales of Rockwell Collins’ equipment in the bigger two-aisle planes of The Boeing Co. (BA - Free Report) and Airbus Group SE (EADSY - Free Report) that fly international routes, to almost three times. It is also expected to double the value of the systems that it sells for new single-aisle planes manufactured by the two aircraft behemoths.
The transaction will result in an improvement in Rockwell Collins’ products and expand its product portfolio, customer mix and geographic presence. It is expected to generate run-rate pre-tax cost synergy of roughly $125 million after tax. Nevertheless, by the end of fiscal 2019, the company anticipates to attain 90% of the cost synergies. In the fiscal year 2018, the deal is expected to provide double-digit accretion to the company’s earnings.
Rockwell Collins’ Take on the Merger
According to Ortberg, the transaction marks the combination of two complementary product lines. This will help the company provide better services to the commercial aviation, business jet and military customers through a broader line of offerings and eventually driving long-term, profitable growth and shareowner value.
Price Performance
Shares of Rockwell gained 2.3% over the last 12 months, underperforming the Zacks categorized Aerospace-Defense Equipment industry’s increase of 14.7%. This could have been because of intense competition from peers like HEICO Corporation (HEI - Free Report) .
Zacks Rank
Both Rockwell Collins and B/E Aerospace currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Sell These Stocks Now
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
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