Global Fastener News

B/E Aerospace Completes Acquisition of Honeywell’s Aerospace Fastener Unit

Jason Sandefur

B/E Aerospace Inc. completed its acquisition of Honeywell’s aerospace fastener distribution business, Honeywell Consumable Solutions, for $1.05 billion, transforming B/E Aerospace into one of the largest distributors of aerospace fasteners in the world.

“The integration of Honeywell’s distribution business with ours is expected to be an important driver of margin expansion and earnings growth for B/E Aerospace over the next three years,” stated B/E Aerospace CEO Amin Khoury. “The combined businesses are expected to generate more than 50% of B/E Aerospace’s operating earnings beginning in 2009, and to steadily increase the distribution segment’s percentage contribution to B/E Aerospace’s operating earnings in 2010 and 2011.”

Consumables Solutions provides custom logistics services OEMs, airlines, repair shops, flight service centers and distributors, as well as distributing aerospace fasteners and hardware.

As part of the deal B/E inked a 30-year contract to become Honeywell’s exclusive licensee to sell fasteners, seals and other products to the global aerospace industry, as well as supplying Honeywell’s production facilities.

With a combination of $901.4 million in cash and six million shares of common stock, B/E paid about twice HCS’ $524 million in revenue last year reportedly about double the aerospace and defense sector’s price-to-sales ratio of 1.1 to 1.

Integrating the two units is expected to take three years. The inventory investment required to convert the HCS business to B/E’s business model is expected to total approximately $200 million.

In 2007 B/E Aerospace reported its distribution segment, including fasteners, generated a 53.7% jump in sales to $386.5 million, reflecting a higher level of revenues from first and second tier aerospace manufacturers and from higher military sales. Operating income soared 69% to $85.5 million.

B/E Aerospace acquired New York Fasteners Corp. (NYF) for $66.9 million in cash during 2007 and merged NYF’s hardware distribution and vendor-managed inventory business with its own distribution operations in Miami.

B/E Distribution operates a 355,760 sq ft distribution facility in Miami and an additional 67,000 sq ft facility in Stratford, CT; a 36,000 sq ft facility in Paramus, NJ; and a 49,000 sq ft facility in Wichita, KS. Web: beaerospace.com �2008 FastenerNews.com