TransDigm Group Inc., headquartered in Cleveland, has announced its intent to purchase the electron device division from Communications & Power Industries International Inc. (CPI) in a deal valued at $1.4 billion in cash. The acquisition will include CPI's microwave power generators and radar system amplifiers, which are integral components for various global industries.
The division being acquired is a part of CPI, owned by the private equity firm TJC, and it stands out for its highly engineered proprietary products. These products are essential for both new and existing platforms within the aerospace and defense sectors. With a workforce of 900 people, the division boasts a strong presence in the US and UK, reflecting CPI's commitment to maintaining a significant manufacturing footprint.
In terms of financial performance, the electron device division reported approximately $300 million in revenue for the fiscal year ending September 30. This revenue primarily stemmed from these proprietary products with substantial aftermarket content—a key factor that likely contributed to TransDigm's interest in the acquisition.
This strategic move comes on the heels of TransDigm's previous acquisition six months ago when it bought Calspan for $725 million, a company specializing in testing aerospace and defense systems. The latest acquisition is expected to be completed by TransDigm's third fiscal quarter of 2024, pending regulatory approvals and customary closing conditions.
TransDigm's CEO Kevin Stein expressed optimism about the acquisition during Thursday's announcement. By integrating CPI's electron device division into their portfolio, TransDigm aims to bolster its product offerings and market reach in the aerospace and defense industry—a sector known for its steady demand and long-term contracts.
InvestingPro Insights
TransDigm Group Inc. (TDG) has been demonstrating robust financial performance, which is reflected in its real-time data from InvestingPro. The company's market capitalization stands at $54.02 billion USD, with a P/E ratio of 52.28. Over the last twelve months as of Q4 2023, TDG has seen a revenue growth of 21.29%, reaching a total revenue of $6585M USD.
InvestingPro Tips highlight the company's accelerating revenue growth and consistently increasing earnings per share. These factors, along with the company's impressive gross profit margins, suggest a strong financial position. It's also worth noting that TDG's stock is currently in overbought territory, and it's trading at a low P/E ratio relative to its near-term earnings growth.
The acquisition of the electron device division from CPI, as discussed in the article, might further strengthen TDG's financial standing. For investors seeking more in-depth insights, InvestingPro offers over 15 additional tips related to TDG's performance and future prospects.
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