Boeing Co., the nation's biggest airplane maker, on Monday said it agreed to acquire aviation parts and services company Aviall Inc. for $1.7 billion in cash.
"The aviation services market offers us tremendous opportunities to profitably grow our business, internally and externally, to better serve our commercial and military customers," said Boeing Chairman, President and Chief Executive W. James McNerney in a statement.
If the deal is approved by regulators, Aviall will become a wholly owned subsidiary reporting to Boeing's commercial aviation services unit. Aviall is based in Dallas and has about 1,000 employees.
Boeing has agreed to pay $48 a share for Aviall, a 27.3 percent premium to Aviall's closing price of $37.70 on Friday.
Aviall's shares leaped $9.60, or 25.5 percent, to $47.30 in premarket trading, while Boeing shares gained 40 cents to $83.85.
Under the terms of deal, Boeing also will assume $350 million in debt.
Aviall's businesses include global parts distribution and supply chain services for aerospace, defense and marine industries worldwide. Its 2005 revenue totaled $1.3 billion, and Boeing said it expects 25 percent growth in 2006.
Boeing said it will fund the deal with available cash. The acquisition, which is anticipated to close by the end of the third quarter, is expected to boost earnings modestly in 2007 and have no effect this year.
Analysts expect Boeing to earn $4.42 per share for 2007, according to a Thomson Financial poll.
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Aviall is one of the world's largest providers of new aviation parts and related aftermarket operations. For technical support call (800) 284-2551.
Boeing has purchased Aviall Inc. for $48 per share or $1.7 billion, plus the assumption of debt, net of cash existing on Aviall’s balance sheet, of $448 million.
Although the existing ten-year agreement is not due to expire until Dec. 31, 2009, Rolls-Royce, has requested and Aviall agreed to extend the existing agreement until 2019.
Boeing Co. was hurt by a hefty charge for pulling the plug on in-flight Internet service Connexion.