Industry Week in Review – March 29, 2013
Over the past week, U.S. Bankruptcy Judge Sean Lane approved the American Airlines merger with US Airways Group, Inc. The potential merger was announced in February, more than a year after US Airways began its pursuit of a deal in January 2012, shortly after American Airlines filed for bankruptcy. A merger of the two companies would create the largest airline in the world. The approval by Judge Lane is the first of two needed approvals; Federal regulators expect to make a final decision on the merger in the third quarter of this year. Judge Lane declined to authorize a proposed severance package for Thomas Horton, CEO of American Airlines’ parent company AMR Corporation, worth nearly $20 million. Horton became CEO of AMR in November of 2011, after the company had filed for bankruptcy. The companies have targeted a consummated transaction by October 14th of this year.
Big Movers
Magellan Aerospace (Up 6.4%) – Shares were up this week after the company reported an almost 33% increase in fourth quarter earnings, citing improved business and increased production by commercial airplane manufacturers. Furthermore, revenue for the year 2012 increased to $704.6 million from $691.4 million in 2011.
Rheinmetall AG (Down 5.6%) – Shares were down this week after the company announced unexpected restructuring charges that will impair earnings this year. The company noted that the restructuring plan, focused on the defense business, will aim to boost cash flow to allow for acquisitions.
Relevant Transactions
The Safariland Group acquired Mustang Survival, a provider of lifesaving equipment for recreational, military, law enforcement, and industrial users in the marine and aviation environments. The acquisition expands Safariland’s product offerings in personal floatation devices and protective clothing for extreme environments. Terms of the deal were not disclosed.
PAI Partners to acquire ADB Solutions, a manufacturer of airfield ground lighting products for large and small airports, military bases, and heliports. PAI Partners expects to expand the business’ footprint, particularly in emerging markets. ADB Solutions reported annual revenue of roughly $211 million for the year ended 2012.
Overall Capital Partners acquired Honeycomb Company of America, manufacturer of complex, bonded, composite assemblies for U.S. military aircraft platforms. The company also provides spare parts for maintenance, repair, and overhaul requirements of the U.S. Air Force and various commercial suppliers. Terms of the deal were not disclosed.
