WELLINGTON, Fla., Jun 09, 2008 (BUSINESS WIRE) -- B/E Aerospace, Inc. (NASDAQ:BEAV), today announced that it has
signed a definitive agreement with Honeywell International Inc. to
acquire the assets of Honeywell's Consumables Solutions distribution
business (HCS). As part of the transaction B/E Aerospace will enter
into a 30-year contract to become Honeywell's exclusive licensee with
respect to the sale to the global aerospace industry of Honeywell
proprietary fasteners, seals, gaskets and electrical components
associated with such products as Honeywell's Engines, APU's, avionics,
and wheels and brakes. B/E Aerospace will also become the exclusive
supplier of such consumable products, as well as standard fasteners
and consumables to support Honeywell's internal manufacturing needs.
"The combination of HCS and B/E Aerospace will create a leading
global distributor and value added supply chain manager of aerospace
hardware and other consumable products from locations in all key
geographic markets worldwide. The combined Company will serve as a
distributor for every major aerospace fastener manufacturer in the
world. In addition, the significant product line expansion and
operating synergies created by the combination will enhance our
ability to serve our customers and create significant value for our
shareholders," said Amin J. Khoury, Chairman and Chief Executive
Officer of B/E Aerospace.
Revenues and pro forma EBITDA, exclusive of synergies, for the
latest twelve months ended March 31, 2008 (LTM) for the HCS business,
including the license and supply agreements, were approximately $553
million and $83 million, respectively. Tax-deductible goodwill arising
on completion of the transaction will provide B/E Aerospace with an
estimated net present value of approximately $143 million resulting in
an effective price of $907 million or approximately 10.9x LTM EBITDA,
excluding synergies, and approximately 5.4x LTM EBITDA, including
synergies. The transaction is expected to yield synergies of at least
$84 million per year by 2011, thereby creating substantial additional
shareholder value. The annual synergies that are expected to be
realized over the three-year period 2009 to 2011 are as follows:
approximately $10 million to $30 million or approximately $0.05 to
$0.20 per share in 2009, approximately $30 million to $60 million or
approximately $0.20 to $0.40 per share in 2010 and at least $84
million or approximately $0.55 per share in 2011.
The purchase consideration of $1.05 billion consists of at least
$800 million in cash plus an additional amount of $250 million which
will be paid in B/E Aerospace common stock or cash, at the Company's
election, although in no event will less than 6 million shares be
issued if the value of the stock component is less than $250 million.
The share component of the $250 million portion of the purchase price
will be valued depending upon the value of the shares, determined as
the volume-weighted average share price based on the 10 consecutive
trading days ending on, and including, the date that is two trading
days prior to the closing date. Honeywell and B/E Aerospace have
entered into a stockholders agreement which includes a holding period
for two years with respect to 50 percent of its B/E Aerospace shares
and for one year with respect to all of its B/E Aerospace shares and
which includes a stand-still provision. B/E Aerospace will fund the
cash consideration and simultaneously refinance its $150 million of
funded debt under its existing credit facilities with a new $1.35
billion fully-committed Senior Credit Facility from JPMorgan, Credit
Suisse and UBS Investment Bank including an undrawn $350 million
Revolving Credit Facility and a $1.0 billion Term Loan B.
Consummation of the transaction is subject to customary regulatory
approvals. Pro forma total debt-to-total capitalization, as of the
twelve months ended March 31, 2008, will be approximately 40 percent.
B/E Aerospace expects to fund the transaction with the new Senior
Credit Facility but is also considering other forms of debt financing.
Approximately $84 million of synergies is expected to arise over
the next three years as the result of:
1. Consolidation of multiple sales offices, forward stocking
locations and operational facilities;
2. Leveraging of B/E Aerospace's robust IT and automated inventory
retrieval systems to support the entire integrated business;
3. Transition of the HCS "broker" business model to the B/E
Aerospace distribution business model.
"Much hard work and significant investment will be required to
complete the integration, which is expected to be implemented in
phases over a three year period. Both B/E Aerospace and HCS have
excellent managerial, sales, procurement, IT and logistics personnel.
We will be retaining the best personnel from both organizations, and
we welcome the many HCS personnel who will be joining B/E Aerospace.
We have a rigorous integration planning process underway and expect to
assemble a fully staffed integration team consisting of key members of
both organizations within 15 days," commented Mr. Khoury.
The inventory investment required to convert the HCS business to
the B/E Aerospace business model is expected to be approximately $200
million over a three-year period. Integration and cash consolidation
costs are expected to be approximately $15 to $20 million.
As a result of the expected accretive nature of this transaction,
B/E Aerospace announced that it is raising its earnings guidance for
2009 and 2010. The Company is increasing its 2009 earnings per share
guidance by $0.05 per diluted share to approximately $2.85 per diluted
share and its 2010 earnings per share guidance by $0.15 per diluted
share to approximately $3.65 per diluted share. The transaction is
expected to be slightly dilutive to full year 2008 earnings per share
as a result of acquisition related effects. In 2009, the first full
fiscal year after expected completion of the transaction, the B/E
Aerospace distribution business segment is expected to be our largest
and most profitable segment and is expected to generate revenues of
approximately $1.2 billion representing approximately 43 percent of
B/E Aerospace's expected 2009 revenues of approximately $2.8 billion.
Mr. Khoury continued, "Growth in our aerospace consumables
distribution segment is expected to exceed industry growth as we
continue to expand our product line and our customer base and as we
continue to gain share.
"Overall, our expectation for B/E Aerospace to continue to deliver
superior earnings performance over the next three years remains
intact. This is consistent with the long term visibility arising from
our high in quality growing backlog in addition to expected follow on
Credit Suisse Securities (USA) and UBS Investment Bank acted as
financial advisors to B/E Aerospace, and provided fairness opinions to
the Board of Directors of B/E Aerospace on the financial terms of the
transaction. Shearman & Sterling LLP provided legal advice to B/E
B/E Aerospace will host a conference call today, Monday, June 9,
2008, at 11:00 a.m. (Eastern Time) to discuss the acquisition of HCS.
Investors can call 1-888-663-2240 (domestic) or 913-312-1452
(international), with the access code 3347851, or listen via live
audio webcast. To listen live and view the presentation, visit the
Investors section of the B/E Aerospace, Inc. website
www.beaerospace.com and follow the link to "Webcasts". A replay of the
call will be available beginning at 1:00 p.m. (Eastern Time) on June
9, 2008, through 1:00 p.m. June 14, 2008 (Eastern Time), at
1-888-203-1112 (domestic) or 1-719-457-0820 (international), with the
access code 3347851. The replay will also be available at
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Such forward-looking
statements include, but are not limited to, the completion of, and
benefits from, the acquisition, B/E Aerospace's financial guidance and
industry expectations for the next several years. Such forward-looking
statements involve risks and uncertainties. B/E Aerospace's actual
experience and results may differ materially from the experience and
results anticipated in such statements. Factors that might cause such
a difference include changes in market and industry conditions and
those discussed in B/E Aerospace's filings with the Securities and
Exchange Commission, which include its Proxy Statement, Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K. For more information, see the section entitled
"Forward-Looking Statements" contained in B/E Aerospace's Annual
Report on Form 10-K and in other filings. The forward-looking
statements included in this news release are made only as of the date
of this news release and, except as required by federal securities
laws, we do not intend to publicly update or revise any
forward-looking statements to reflect subsequent events or
About B/E Aerospace, Inc.
B/E Aerospace, Inc. is the world's leading manufacturer of
aircraft cabin interior products, and the leading aftermarket
distributor of aerospace fasteners. B/E Aerospace designs, develops
and manufactures a broad range of products for both commercial
aircraft and business jets. B/E Aerospace manufactured products
include aircraft cabin seating, lighting, oxygen, and food and
beverage preparation and storage equipment. The Company also provides
cabin interior design, reconfiguration and passenger-to-freighter
conversion services. Products for the existing aircraft fleet - the
aftermarket - generate about 60 percent of sales. B/E Aerospace sells
and supports its products through its own global direct sales and
product support organization. For more information, visit the B/E
Aerospace, Inc. website at www.beaerospace.com.
SOURCE: B/E Aerospace, Inc.
B/E Aerospace, Inc.
Greg Powell, 561-791-5000, ext. 1450
Vice President, Investor Relations