December 27, 2013
Cessna parent Textron hopes to conclude a deal in the first half of 2014 to purchase Beechcraft for approximately $1.4 billion. The move would represent a major consolidation within the U.S. general aviation market, bringing together two of the oldest rivals and most historic industry names under a single owner.
Textron plans to finance the deal through a combination of available cash and up to $1.1 billion in new debt. Beechcraft’s equity holders have approved the agreement, which is subject to the customary approvals.
Textron Chairman and CEO Scott Donnelly, who has long expressed interest in the Beechcraft programs, calls the acquisition “a tremendous opportunity to extend our general aviation business.”
The acquisition would provide Textron with a King Air twin-turboprop family that has experienced significant growth this year, along with a stable piston product line. But it also will provide a support network that when combined with Cessna’s, will be an extensive global support provider.
Perhaps most importantly, the acquisition will bring with it an installed base of close to 36,000 Hawker and Beechcraft aircraft that must be serviced.
Textron also is acquiring the type certificates for all of the former Hawker and Beechcraft business jets, including the Premier and Hawker 4000, programs that Beechcraft has been actively shopping since it shuttered the lines more than a year ago.
“From our customers’ perspective, this creates a broader selection of aircraft and a larger service footprint— all sharing the same high standards of quality and innovation,” Donnelly says. He praises the twin-turboprop King Air product line as “a fantastic global brand that fits very, very nicely” with Cessna Aircraft’s Caravan [single-turboprop] and Citation jet lines.
Beechcraft CEO Bill Boisture says “Textron’s experience in the industry and its willingness to invest in and maintain the iconic Beechcraft brand make it an ideal parent company, one that will help us continue to satisfy our customers and meet our business objectives at a faster pace.”
Textron is evaluating synergies in the Cessna and Beechcraft businesses, and seeing about $65 million in cost overlaps between the companies and up to $85 million over three years. But Donnelly was hesitant to specify where those synergies would come from, saying much of that work lies ahead. He did say a large part of the cost savings would come from reducing overheads.