Boeing announced today that the company has entered into an agreement to acquire Spirit AeroSystems in an all stock transaction with an equity value of approximately $4.7 billion. Based on Spirit’s last reported debt, the total value of the transaction is roughly $8.3 billion.
This is a major development as Boeing looks to right the ship as the company has been plagued by aircraft quality issues in recent years. The aircraft manufacturer’s reputation has taken a significant hit due to the recent issues and repurchasing Spirit, which Boeing spun off as a standalone company back in 2005, is another step in attempting to get the airline back on track.
In announcing the acquisition, which was really the only option for the two parties, Boeing President and CEO, Dave Calhoun, said this:
“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly. By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes – centered on safety and quality.”
Dave Calhoun, Boeing President and CEO
What is Spirit AeroSystems
Spirit AeroSystems is a Wichita, Kansas based company that provides a variety of key components for Boeing Aircraft. Most notably, the airline produces the fuselage sections for the 737 and 787 families of aircraft. The Alaska Airlines plane that had a door plug detach from the fuselage during flight was manufactured by Spirit.
In addition to the products it manufactures for Boeing, Spirit also makes fuselage, wing, and other sub-assemblies for Airbus aircraft and other various aircraft manufacturers.
What’s in the Deal
As part of the Spirit purchase, Boeing will absorb all Boeing related commercial operations along with additional commercial, defense, and aftermarket operations. Boeing has committed to working with Spirits customers, including the U.S. Department of Defense, to ensure continuity of operations during the acquisition.
In addition to its work for Boeing, Spirit also was a supplier for rival planemaker Airbus. As part of the acquisition of Spirit by Boeing, Airbus and Spirit have entered into “binding term sheet under which Airbus will acquire, assuming the parties entered into definitive agreements and receipt of any required regulatory approvals, certain commercial work packages that Spirit performs for Airbus concurrently with the closing of the Boeing-Spirit merger.”
Spirit is also proposing the sale of certain operations located in Belfast, Northern Ireland, Prestwick, Scotland, and Sunbang, Malaysia. The transaction is expected to close sometime in mid-2025 pending regulatory and shareholder approvals. However, I don’t see a scenario where this acquisition is at risk in any form.
Summary
Boeing is acquiring Spirit AeroSystems in an all stock-transaction valued at approximately $8.3 billion ($4.7 billion in stock and $3.6 billion in debt). This news comes as Boeing looks to fix significant quality issues that have plagued the manufacturer in recent years leading to significant regulatory and public scrutiny. The company still has a long way to go to rebuild its once sterling reputation, but this is a good step.
