On Monday, Truist Securities maintained a Hold rating on shares of Spirit AeroSystems (NYSE:SPR) with a $30.00 price target. Boeing (NYSE:NYSE:BA) has agreed to purchase Spirit AeroSystems for approximately $4.7 billion in an all-stock transaction. The offer of $37.25 per share is about a 14% premium over Spirit's closing price last Friday, valuing the company at around $8.3 billion.
Under the terms of the agreement, Spirit shareholders will receive Boeing shares at an exchange ratio ranging from 0.18 to 0.25, based on Boeing's weighted-average share price during a specified period before the deal's closing. The weighted-average price will be calculated between a $149/share floor and a $206.94/share ceiling.
Airbus (EPA:AIR) has concurrently agreed to acquire certain Spirit AeroSystems operations related to Airbus platforms. Airbus will receive $559 million from Spirit for these assets, which are valued nominally at $1. The acquisition includes facilities in the United States, France, Ireland, Morocco, and the United States.
Moreover, Spirit AeroSystems is planning to divest other peripheral operations located in Belfast, Ireland; Prestwick, Scotland; and Subang, Malaysia. These sales are part of the broader arrangement with Boeing and Airbus.
The completion of this significant consolidation in the aerospace sector is anticipated by mid-2025. The time until the closing allows Boeing a considerable window to potentially increase its production rates. The proposed acquisition is a strategic move by Boeing, expanding its capabilities and presence in the aerospace industry.
In other recent news, Boeing has been making decisive moves in the aerospace industry. The company recently confirmed its acquisition of Spirit AeroSystems, a strategic decision that BofA Securities maintains is a long-term opportunity to enhance operational efficiency, despite potential near-term challenges.
The deal is expected to provide Boeing with greater quality control and oversight on production, particularly for the production of Boeing's 737 and the 787-ramp up.
Alongside this, Airbus and Boeing have finalized the acquisition of Spirit AeroSystems units, a significant realignment of operations within the industry. The stock deal, valued at $4.7 billion, sees Boeing taking over key manufacturing plants, while Airbus will control operations at other strategic locations.
In parallel developments, Boeing has resumed aircraft deliveries to China following a regulatory review pause. However, the company also faces criminal charges over 737 MAX crashes, with the U.S. Justice Department presenting a plea agreement that includes a financial penalty and the appointment of an independent monitor.
These recent developments reflect a substantial shift in the aerospace industry and the strategic moves by Boeing to reshape their supply chain and production capabilities.
InvestingPro Insights
The recent move by Boeing (NYSE:BA) to acquire Spirit AeroSystems (NYSE:SPR) comes at a time when Boeing's financial metrics reflect certain challenges. According to real-time data from InvestingPro, Boeing's market capitalization stands at $114.57 billion, yet the company is facing a negative P/E ratio of -51.29, indicating investor concerns about profitability.
Moreover, the last twelve months as of Q1 2024 have seen Boeing's revenue grow by 8.37%, yet the company's gross profit margin remains low at 11.48%, underscoring the concerns highlighted by InvestingPro Tips about Boeing's weak gross profit margins.
InvestingPro Tips also reveal that Boeing is a prominent player in the Aerospace & Defense industry, but analysts have revised their earnings downwards for the upcoming period, and they do not anticipate the company will be profitable this year. The stock has experienced significant volatility, with a 30.17% drop in the six-month price total return as of mid-2024, which could be a point of caution for investors considering the impact of the Spirit AeroSystems acquisition.
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