Why Kaman (KAMN) Is Buying Parker-Hannifin’s Aircraft Wheel & Brake Division For $440 Million

By Annie Baker ● May 23, 2022
  • Kaman Corporation (NYSE: KAMN) recently announced it is buying Parker-Hannifin’s aircraft wheel & brake division for $440 million. These are the details.

Kaman Corporation (NYSE: KAMN) announced that it has entered into a definitive agreement with Parker-Hannifin Corporation, under which Kaman will acquire Parker’s aircraft wheel & brake division for $440 million, subject to a customary working capital adjustment and the receipt of all necessary regulatory approvals. Parker is divesting Aircraft Wheel & Brake in order to secure approval from certain governmental authorities in connection with Parker’s previously announced offer to acquire Meggitt PLC.

Aircraft Wheel & Brake has been a trusted provider of wheel and brake technology products and solutions for over 80 years. And with a strong product portfolio supporting over 100 platforms, Aircraft Wheel & Brake specializes in wheels, brakes, and related hydraulic components for fixed-wing aircraft and rotorcraft.

Plus they have long-standing global relationships with leading military and general aviation customers providing customized proprietary designs, protected by intellectual property. And Aircraft Wheel & Brake operates out of one centralized facility in Avon, Ohio, providing a full suite of capabilities including design, development, and qualification, as well as manufacturing and assembly, product support, and repairs.

Financial Benefits of the Transaction

– Expands a Leading Engineered Products Provider – With a larger and even more extensive portfolio of engineered products, Kaman will broaden the number of offerings available to serve customers across a wide range of critical applications. And Kaman’s expertise in running a solutions-based business combined with Aircraft Wheel & Brake’s proprietary manufacturing and material science technologies should enhance Kaman’s Engineered Products segment and add scale to its operations.

– Provides Access to Attractive End Markets – The addition of Aircraft Wheel & Brake increases Kaman’s exposure to attractive aerospace and defense end markets with significant growth potential. Additionally, it provides the opportunity to increase Kaman’s position in higher-margin aftermarket products.

– Delivers Financial Benefits – The deal is expected to be accretive to Kaman’s margin and cash flow within the first twelve months following the close of the transaction. The purchase price, values Aircraft Wheel & Brake at a multiple of 14x EBITDA for the twelve months ended December 31, 2021, including estimated tax benefits. Following the deal, Kaman intends to apply the free cash flow from the combined business to quickly deleverage the balance sheet.

KEY QUOTES:

“We are executing on our strategic priority of growing through accretive M&A, by expanding our Engineered Products segment by adding capabilities in markets that we know well. The complementary acquisition of Aircraft Wheel & Brake will advance this strategy by expanding the breadth of our product offerings, increasing our exposure to attractive markets, and driving meaningful near-term margin and cash flow accretion. We are excited to add the experienced Aircraft Wheel & Brake management team to our organization while utilizing their leading proprietary technology and strong customer relationships.”

– Ian Walsh, Chairman, President and Chief Executive Officer

“Like Kaman, Aircraft Wheel & Brake prides itself on its best-in-class engineering and innovation and an engaged and loyal workforce that is dedicated to commercial excellence. We believe our similar cultures and customer-centric approaches make our organizations an outstanding match. We are excited for the Aircraft Wheel & Brake employees to join the Kaman team and work together to solve our customers’ toughest challenges.”

– Russ Bartlett, Senior Vice President, Chief Operating Officer and Engineered Products Segment Lead