LONDON — British aerospace and defense company Meggitt has dipped into the acquisition market for the second time in a matter of weeks with the purchase of the composite components arm of EDAC in the US.
The $340 million purchase will see Meggitt gain capability in components for jet engine and airframe applications.
Around 15 percent of the expected $104 million in 2015 revenues are in defense; the remainder is in civil aerospace composites. EDAC was formerly known as Parkway Aerospace and Defense.
The business, acquired from the Greenbriar Equity Group and others, has plants in the US and Mexico; the latter includes a joint venture with UTC Aerospace Systems.
In August, Meggitt acquired the advanced composites business of British company Cobham in a deal worth $200 million.
Military sales of the Cobham business account for around 85 percent of its $81 million in revenues — pretty much the reverse of the defense/civil sales ratio in the latest deal with EDAC.
Cobham has produced composite radomes, engine parts and other specialized components from plants in the UK and the US for customers including Lockheed Martin with the F-35.
Meggitt said at the time of the Cobham purchase that it saw significant growth opportunity in commercial aerospace for the business.
Philip Barker, partner and head of industrials at acquisition advisers Cavendish Corporate Finance, here, said the acquisition further confirmed a trend toward companies strengthening their positions in the civil sector at the expense of defense.
"Global demand for higher commercial aircraft production rates has bolstered the aerospace sector, and this acquisition reflects a persistent trend of supply chain consolidation with major industry players seeking to scale up capacity," he said. "Diversification into commercial aviation is further motivated by the long-term trend of reduced defense spending in Western countries, and has proved popular among other industry heavyweights."
Stephen Young, Meggitt's CEO, said purchase of the EDAC business "decisively moves our composites strategy forward and positions us strongly in this key growth area."
Both the businesses will be folded into Meggitt's polymers and composites division.
Email: achuter@defensenews.com
Andrew Chuter is the United Kingdom correspondent for Defense News.
