Graham Warwick/WASHINGTON DC
Northrop Grumman has agreed to sell its commercial aerostructures business to US investment firm The Carlyle Group in a transaction valued at $1.2 billion, including the assumption of $400 million in unfunded retirement benefits.
The aerostructures business produces subassemblies for most Boeing commercial aircraft, the Boeing C-17 military transport and the Gulfstream V business jet. Sales this year are expected to be around $1.2 billion.
Carlyle says the business will remain based in Dallas, Texas, and will be renamed Vought Aircraft. Northrop Grumman, meanwhile, is to restructure its Integrated Systems and Aerostructures sector following the sale, relocating the headquarters to Washington DC and renaming it the Integrated Systems Sector.
Northrop Grumman linked with Carlyle in 1992 to buy LTV's Vought Aircraft operations , which form half of the commercial aerostructures business. The company bought out Carlyle's stake in 1994. The unit no longer fits into Northrop Grumman's strategy to focus on defence electronics and information technology.
Carlyle is already active in the business through its 1996 buy-out of Textron's aerostructures unit, now operated as Nashville, Tennessee-based Aerostructures. Carlyle is a frequent investor in aerospace, funding a management buy-out of freight carrier Gemini Air Cargo in July last year. Other aviation investments include US fixed-base operator chain Piedmont/Hawthorne.
Northrop Grumman says the sale of its aerostructures business will reduce revenues to $7.6 billion this year, down from $9 billion last year, but these are expected to increase next year to $8.4 billion because of strong growth in defence electronics and information technology. The company has just announced the acquisition of US electronic warfare specialist Comptek Research, which had sales last year of $145 million.
One reason given by Northrop Grumman for selling its commercial aerostructures business is the expected fall in revenues with the scheduled decline in Boeing airliner production rates.
Source: Flight International
