Global Fastener News

Hagan: Aerospace Fastener Demand Fueling Acquisitions

John Wolz

Delivery lead-times for many aerospace fastener manufacturers “are presently running at more than 40 weeks on new incoming orders,” and that has led to major corporate acquisitions, a specialist in fastener mergers and acquisitions finds. “The aerospace fastener sector has experienced the most significant deal activity over the past few years, with attractive prices being paid for both manufacturers and distributors,” Pinnacle Capital Corporation president Richard Hagan observed.

There were five aerospace fastener acquisitions with selling prices in excess of $30 million completed during 2006, Hagan pointed out.
“So far this year, two major aerospace fastener deals have been completed — the purchase of Cherry Aerospace by Precision Castparts for $300 million and the purchase of McKechnie Aerospace by JLL Partners for $850 million,” Hagan reported.

“We are aware of other aerospace fasteners deals which are currently ‘in the works’ and expect that 2007 will be another banner year for deal-making in the aerospace fastener segment.”
Hagan noted that the Aerospace Industries Association reports industry sales rose 11% in 2006 and projects an 8% increase this year.

“Much of the sales growth has occurred on the commercial side where orders and backlogs have ballooned. The production capacity of both Boeing and Airbus is essentially sold out through 2011 and analyses of the age of the world’s commercial airline fleet suggest that replacement orders should remain strong for many years,” Hagan explained.

“Historically, the aerospace sector has tended to go through five-to-seven year up-and-down cycles and the prospects are excellent that the current up cycle which began in earnest during 2004 will last for quite some time,” Hagan reflected.

“With strong demand from commercial aircraft manufacturers and steady spending on maintenance and repair by the U.S. government, most aerospace fastener manufacturers are currently producing at maximum capacity,” Hagan told FastenerNews.com. “Quite logically, strong current and projected sales and profitability for the aerospace fastener segment has made it attractive for opportunistic buyers and sellers to get together.” E-mail: rphagan@pinnaclecapitalcorp.com �2007 FastenerNews.com