On January 12, Hexcel and Woodward announced the final agreement. The two companies will establish a new company, Woodward Hexcel, through a peer-to-peer merger of all shares. Based on the closing prices of both parties on January 10, this transaction is worth approximately US $ 6.43 billion.
Woodward is currently one of the oldest and largest control system and solution providers in the world. Its business scope covers aviation, power generation, power distribution, processing industry, transportation industry and other fields. Its products are in aviation engines, gas turbines, It has applications in internal combustion engines, steam turbines, power system equipment, and wind power generation equipment.
Hearst Composites is the world's leading advanced structural materials company, mainly engaged in the development and production of lightweight high-performance composite materials, including carbon fiber and its reinforced fabrics / prepregs, honeycomb core materials, resins, adhesives and composite materials, etc. , Widely used in aviation, defense and other fields.
According to the agreement, Hirsch's shareholders will purchase Woodward's common shares at a ratio of 1: 0.625; while Woodward's shareholders will continue to hold the same number of original common shares in the new company. After the merger is completed, the original shareholders of Woodward and Hearst Composites will hold 55% and 45% of the new company's equity, respectively. The transaction will increase Woodward ’s quarterly dividend per share to $ 0.28.
After the merger, the new company headquarters will be located in Fort Collins, Colorado, with more than 16,000 employees, and production operations in 14 countries on five continents, with business scope covering multiple terminal areas. According to estimates provided by Sina Finance, the combined company will have a market value of US $ 13.7 billion, making it one of the largest parts suppliers in the global aerospace industry.
Nick Stanage, chairman and chief executive officer of Hedgehog Composites, will serve as the new company ’s CEO. Wood Gend ’s chairman, CEO, and president Tom Gendron will serve as the new company ’s executive chairman within one year of the merger and expire Non-executive chairman for any year following retirement. Later, Nick Stanage will also serve as chairman of the new company. The new company's board of directors has a total of 10 members, consisting of 5 directors appointed by each party (including Nick Stanage and Tom Gendron).
Tom Gendron said: "Woodward and Hull Composites are committed to satisfying customers' needs for efficiency and sustainability. This cooperation will accelerate the technology investment of both parties and create greater business growth opportunities. Goals that cannot be accomplished independently. "
Nick Stanage said: "The future aviation industry will continue to advance with low costs, low emissions and a high degree of safety. The combination of Hulls and Woodward will make the new company stand in this historic revolution At the forefront. With Woodward ’s innovative control system and Hirsch ’s lightweight advanced materials, as well as the volume and abundant cash flow of both parties, we will better promote technological innovation in the aerodynamics and propulsion systems. To create exciting new achievements. "
Both parties will invest approximately 250 million in technology research and development in the first year after the merger, and will subsequently invest more resources in the development of aerodynamics, propulsion systems, and energy-saving technologies. The synergistic cost-effectiveness of this merger will save both parties $ 125 million in annual expenditure.
According to the performance of both parties in fiscal year 2019, the new company's estimated annual sales revenue will reach 5.3 billion US dollars, EBITDA profit will reach 1.1 billion US dollars, and EBITDA profit margin will reach 21%. The new company's annual free cash flow is about 1 billion US dollars, and will continue to grow, the initial dividend income is expected to be 1%.
According to the agreement, the merger is expected to be completed in the third quarter of 2020.