TransDigm Takes Over Kirkhill, Acquisition Strategy Strong
Zacks Investment Research | Mar 15, 2018 10:29PM ET
TransDigm Group Incorporated (NYSE:TDG) wrapped up the acquisition of the Kirkhill engineered elastomers business from Esterline Corporation (NYSE:ESL) for a consideration of $50 million in cash, recently. The purchase price is subject to normal and customary adjustments.
The Kirkhill business makes specialty seals and other rubber components meant primarily for aerospace and defense markets. Based at Brea, CA, the business is a dominant supplier of highly-engineered aerospace elastomers and generates annual revenues of roughly $90 million. About 50% of its sales are derived from commercial transport airframes and the rest primarily from defense aerospace applications.
Importantly, the products are mainly proprietary, sole source with significant aftermarket content. They have a broad range of applications in most major commercial transport and military platforms. Latest commercial platforms like Boeing (NYSE:BA)'s 787, 777X and 737MAX; Airbus's A320NEO and A350; as well as the military JSF also use its products.
TransDigm’s long-term growth strategy rests on five pillars, one of which is expanding its proprietary aerospace businesses. TransDigm frequently acquires proprietary aerospace businesses with significant aftermarket content, which boosts its footprint in its core market and is in line with its operating strategies. In fact, 90% of the company’s net sales are generated by proprietary engineered products and the Kirkhill acquisition will add to the same.
Over the last three years, the company has acquired about $3 billion of proprietary aerospace businesses. In the past few months, the company has been integrating the recent product-line acquisitions of Preece, Cablecraft and North Hills into AdelWiggins, AeroControlex and Data Device Corporation respectively.
TransDigm’s shares have appreciated 11.8% over the past six months, outperforming the Zacks Investment Research
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