Brussels (Brussels Morning Newspaper) – According to documents on the European Commission website, Boeing, a leading global aerospace company, is seeking approval from the European Union to repurchase Spirit AeroSystems, the world’s largest independent aerostructures firm.
Last July, Boeing announced it agreed to acquire its former subsidiary for $4.7 billion in shares, while Airbus would assume the supplier’s unprofitable Europe-focused operations. The EU executive body is expected to make its decision on the deal by September 30.
Why did Boeing decide to reacquire Spirit Aerosystems?
Boeing has agreed to purchase Spirit AeroSystems, one of its most important suppliers and manufacturing partners, as an effort to rehabilitate its wrecked safety reputation. The all-stock deal, which values the supplier at $4.7 billion or $37.25 per share, was disclosed after months of discussions between Boeing and the company it spun off in 2005.
In March, Boeing announced its plan to acquire Spirit, stating that the merger would enhance safety. Boeing’s current leadership has acknowledged that selling Spirit to private equity buyers in 2005 for just $900 million was a mistake, as it damaged the reliability of their supply chain.
When did Boeing spin off Spirit AeroSystems?
Spirit AeroSystems was created as a spin-off from Boeing in 2005. Boeing sold its Wichita division (including the facilities in Tulsa and McAlester) to an investment company (Onex Corporation) in a cash deal of $900 million and the assumption of $300 million in debt, for an estimated enterprise value of $1.2 billion. The divestitures were aimed at part of Boeing’s strategy to focus on improving returns on net assets at that time.
What components does Spirit manufacture for Boeing aircraft models?
Spirit AeroSystems manufactures key components for multiple Boeing models, including the fuselages for the 737 Max. These parts are then transported to Boeing’s factories for assembly. Additionally, the company produces parts for Airbus, Boeing’s competitor, although Boeing remains Spirit’s biggest customer.
This agreement represents Boeing’s attempt at regaining tighter control of its overall supply chain and the quality assurance aspect after a variety of production difficulties in the last few years. The acquisition will also see Spirit restructure as it sells some of its operations to European aerospace imaging giant Airbus, as part of regulatory agreements.
