Woodward and Hexcel will Merge to Become One of the Largest Aerospace Suppliers

Matty-Sways

Aerospace suppliers Woodward Inc. and Hexcel Corp. set plans for an all-stock merger, both companies make parts for Airbus SE and Boeing Co. jets, including the grounded 737 MAX. Woodward and Hexcel said their merger would allow them to expand spending on research and development of more efficient engines and lightweight aircraft parts. The combined company, renamed Woodward Hexcel, would be among the aerospace industry’s largest suppliers, with a market capitalization of $13.7 billion, combined sales of $5.3 billion last year and 16,000 person staff.

The proposed deal would value the companies as equals, with Woodward shareholders owning 55% of the combined entity. Mr. Stanage would lead the combined company with Woodward’s Mr. Gendron becoming executive chairman.

Woodward and Hexcel have diverse portfolios that include most commercial and military jets, as well as sales to the auto, power generation and other markets. Executives at Woodward and Hexcel said increasing pressure to address emissions (around 2% of global greenhouse-gas as an industry) and noise footprint was the catalyst for their plans to merge.

“There’s huge pressure on the aerospace industry to reduce greenhouse-gas emissions,” Woodward Chief Executive Tom Gendron said on an investor call. Hexcel CEO Nick Stanage said the enlarged company would boost research spending to almost 5% of annual sales.

The proposed terms call for Hexcel shareholders to receive 0.625 Woodward shares for each one they hold.

On Friday, Woodward shares fell 0.2% to $121.96. Hexcel shares lost 1.9% to $72.91.

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