Boeing Agrees to Buy Spirit AeroSystems, a Longtime Supplier
Boeing acquires Spirit AeroSystems for $4.7 billion in stock, aiming to address quality issues and gain control over production. The deal includes debt, marking a strategic shift for Boeing.
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Boeing has agreed to purchase Spirit AeroSystems, a major supplier, in a deal valued at $4.7 billion in stock or $8.3 billion including debt. This move marks a strategic shift for Boeing, reversing a trend of outsourcing production that began in the 2000s. By acquiring Spirit, Boeing aims to address quality issues that have affected the supplier in recent years. The acquisition is expected to allow Boeing greater control over production practices and safety systems. Spirit AeroSystems, which was created in 2005 during Boeing's outsourcing initiative, also supplies components to other aerospace companies besides Boeing, including Airbus. The deal is subject to regulatory approval and shareholder agreement. Boeing's decision to purchase Spirit comes amidst ongoing quality concerns within its own operations, highlighted by incidents such as a panel blowing out of a 737 Max 9 during a flight. Boeing has since implemented changes to improve quality control and production processes, including halting acceptance of flawed fuselages from Spirit.
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6 commentsAirbus only needs the part of Spirit that relate to them, but Spirit's factories are not organised like that (e.g. the Northern Ireland complex that manufacturers the A220 wings also manufactures parts for Bombardier private jets). So it would be interesting exactly how Spirit, Boeing and Airbus split things up, and what the impact on workers and production will be.
Also, Airbus was asking to be paid for taking the parts of Spirit related to them because of their sorry state (the Northern Ireland site needs billions of investments, according to them). It's pretty funny if Boeing paid Airbus to take parts off Spirit so that Boeing can begin to try to fix their mistake from 20 years ago. Airbus are definitely making them a favour though (if they refuse, anti-competitive regulators will surely block the deal). So it's a win for Airbus, potential long term win for Boeing.
Edit: just read the FT's article on the topic, which is more detailed and covers those topics - Airbus will receive $559 million, and will take over Spirit factories in Northern Ireland, Morocco and France. Spirit will spin-off some other unrelated businesses, including other parts of the Northern Ireland facilities, which might be disastrous for the workforce there.
Article: Boeing agrees to buy Spirit AeroSystems in $4.7bn deal - https://on.ft.com/3VMqoiL via @FT
This deal is at $37.25 per share, implying a $4.7bn market cap and $8.3bn enterprise value [3]. Spirit’s shareholders got hosed; value was transferred to its lenders.
[1] https://www.seattletimes.com/business/spirit-aerosystems-gai...
[2] https://www.usinflationcalculator.com/
[3] https://www.ft.com/content/c35beaff-03d3-4a55-89ff-8adce4e06...
Paying Airbus to take their bit of this, is .. well it's strange but then I guess not.
Boeing being Boeing, somebody got a massive KPI for making this outsource happen, then somebody else will get a massive KPI for unwinding it.
https://www.reuters.com/markets/deals/boeing-agrees-deal-buy...
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