Fort Collins-based Woodward Inc., which designs and manufactures control systems for aerospace and industry, said it has agreed to an all-stock merger with Connecticut-based Hexcel Corp., a manufacturer of composite materials for the aerospace, defense and industrial markets.
The two said in a statement Sunday that the combined company, to be called Woodward Hexcel, will be among the top independent aerospace and defense suppliers globally with anticipated net revenues of about $5.3 billion and operating earnings of $1.1 billion. The company will be headquartered in Fort Collins and will have more than 16,000 employees in 14 countries on five continents, Woodward and Hexcel officials said.
The combined company’s free cash flow is expected to be about $1 billion annually and growing, company officials said.
“This merger accelerates our technology investments and creates greater benefits and growth opportunities than either company could have achieved alone,” said Tom Gendron,Woodward chairman, CEO and president.
Nick Stanage, Hexcel chairman, CEO and president, said the future of flight and energy efficiency will be defined by lower ownership costs, reduced emissions and enhanced safety.
“Woodward’s innovative control systems and Hexcel’s advanced lightweight materials are designed to drive improved reliability, efficiency, and emissions,” Stanage said.
Existing Woodward shareholders will own approximately 55% and Hexcel shareholders will own approximately 45% of the combined company on a fully diluted basis when the merger is completed, according to the companies.
The merger is expected to be completed by around the middle of the year.
Stanage will be CEO of the combined company. Gendron will serve as executive chairman until the first anniversary of the closing of the merger, at which time he plans to retire. He’ll serve as non-executive chairman of the company until the second anniversary of the mergers’ close.
Woodward, started in Rockford, Ill., is about 150 years old and has been in Fort Collins since the 1950s, said spokeswoman Tracy Gohari . She said Woodward currently employs about 9,200 people in 14 countries.
Boeing and Airbus are among Woodward’s major clients, Gohari said.
Analysts were generally positive about the transaction Monday. Douglas Rothacker of Bloomberg Intelligence said the deal appeared to be a solid strategic move, “forming a strong cash-generating, high-margin business with greater scale.”
Woodward designs, manufactures and services control systems and components for aerospace and industrial markets, including oil and gas, petrochemical and processing plants.
Hexcel develops, manufactures and markets advanced composites used for commercial aerospace, space and defense and industry. com.
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