TransDigm Group (TDG, Financial) Incorporated is a North American company, headquartered in Cleveland, Ohio. The company designs, manufactures and distributes commercial and military aerospace components.
Transdigm Incorporated was created by W. Nicholas Howley and Douglas W. Peacock after the acquisition of Adel Fasteners, Controlex Corporation, Aero Products Component Services, and Wiggins Connectors from IMO Industries in 1993.
In 1998, Transdigm Incorporated was acquired by Odyssey Investment Partners.
Transdigm Group Incorporated was formed by Warburg Pincus Private Equity VIII in 2003 to acquire Transdigm Incorporated.
TransDigm set to acquire Telair
TransDigm Group Inc. has agreed to strike a deal with AAR Corp. (AIR), an American aviation and defence industries services provider, to buy its cargo handling business – Telair Cargo Group. The acquisition is valued at $725 million, and is expected to be completed in the next two months.
TransDigm intends to finance the deal with the help of revolving credit facility and existing cash.
The Telair Cargo Group is sectioned into three major units– Nordisk Aviation Products AAR Cargo Systems (Telair US) and Telair International GmbH (Telair Europe).
Telair Europe, headquartered in Miesbach, Germany, is the largest operating unit in Telair, and is responsible for about 60% of the revenues and a bigger cut of the profits.
Nordisk manufactures unit load devices and is headquartered in Holmestrand.
Telair U.S., headquartered in Goldsboro, N.C., produces in-aircraft cargo loading systems and parts for commercial and military platforms, which includes passenger to freighter changes.
For this fiscal year ending in May 2015, Telair revenues are expected to be around $300 million, with EBITDA (earnings before interest, tax, depreciation and amortization) margin nearing 20%. The company’s revenue from the commercial aerospace market is expected to exceed 80%, with the remainder to be generated by the military aerospace market.
Telair has approximately 600 employees in areas spanning from Germany to North Carolina. AAR Corp. hopes to generate an estimate $200 million pre-tax gain from the acquisition as it claims that the precision-systems generating operation is on the horizon, in a quest to focus on services and not production.
What to expect from the acquisition?
The acquisition of Telair Cargo Group by TransDigm seems like a good strategic fit in accordance with the prominent position that the enterprise enjoys in dealing with equipments and the associated aftermarket worldwide. Along with that, TransDigm is looking at proprietary aerospace avenues with sturdy and lucrative aftermarket potential, which Telair has, with around 45% of its revenues generated from there. The decision by Transdigm to carry on the Telair acquisition looks like a good step, with the expectation that this acquisition will open doors for its shareholders’ wealth creation in the future.
TransDigm is not looking at a revenue hike for the first 12 to 18 months after the deal but is looking for a growth onward of the year 2016.
TransDigm, which is a pioneering global designer, creator and supplier of highly developed aircraft machineries, structures and subsystems for utilization on almost all commercial and military aircraft in service currently, looks likely to provide a sturdy growth for Telair. The company’s continuous investment in new platforms and its positioning for growth as the commercial aerospace and cargo markets can help develop a formidable future for the Telair group, including its employees and customers.
