Curtiss-Wright Corporation ( CW Quick Quote CW - Free Report) recently revealed that its acquisition of Safran Aerosystems Arresting Company (“SAA”) has reached completion. The move is in sync with Curtiss-Wright’s intent to boost its earnings and free cash flow generation prospects in the long haul.
Valued at $240 million, the acquisition is likely to boost CW’s capabilities in manufacturing fixed-wing aircraft emergency arresting systems. With operations under Curtiss-Wright’s Naval & Power segment, the business structure of SAA aligns with the acquirer’s current helicopter landing and recovery systems, thus providing an edge for Curtiss-Wright to enhance its product portfolio.
Benefits of the Acquisition
Through the SAA acquisition, Curtiss-Wright aims to become a leading global supplier of fixed-wing aircraft recovery and arresting systems. Also, it is likely to fortify the company’s presence in the global defense market, aided by SAA’s global footprint.
In this context, it is imperative to mention that 75% of SAA’s sales are generated from countries outside the United Sales, including many NATO partners. No doubt, the acquisition is likely to increase its customer base globally.
Moreover, the acquisition is anticipated to be profitable for CW’s earnings and is also expected to generate a strong free cash flow conversion rate of more than 100% for the company, indicating a strong liquidity position going forward. This should enable the company to recycle its excess cash flow in other profitable and revenue-generating strategies.
Additionally, with the acquisition, Curtiss-Wright aims to enhance its prospects of further order inflows, fueled by its improved product range, thus supporting and meeting the evolving needs of the defense landscape. This, in turn, is likely to bolster its top line in the long haul.
Acquisition is one of the popular strategies that companies engage in to scale up their operations and expand into new markets. In this context, Curtiss-Wright apart, defense companies that have lately been dynamically involving themselves in acquisition strategies to gain from the economies of scale and increase their market share are
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In the past year, shares of Curtiss-Wright have risen 5.6% against the
industry’s fall of 1.5%. Image Source: Zacks Investment Research Zacks Rank
Curtiss-Wright currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .