B/E Aerospace, Inc. Agrees to Acquire Leading Commercial Aircraft Cabin Interior Design and Integration Firm
WELLINGTON, FL--(BUSINESS WIRE)--July 21, 1998--B/E Aerospace, Inc. (Nasdaq-NMS:BEAV - news) announced today that it has agreed to acquire SMR Aerospace, Inc. (SMR), a worldwide leader in the provision of design, integration, installation and certification services for commercial aircraft passenger cabin interiors. The purchase price is expected to be approximately $142 million. Completion of the acquisition is subject to a number of conditions, and a closing is expected during August 1998.
SMR provides a broad range of interior reconfiguration services which allow airlines to change the size of certain classes of service, modify and upgrade the seating, install telecommunications or entertainment options, relocate galleys and lavatories, and install crew rest compartments. Essentially all aircraft undergoing such a reconfiguration require new seats, galley equipment or a range of other equipment that B/E currently manufactures. SMR is also a leading supplier of structural design and integration services, including airframe modifications for passenger- and combi-to-freighter conversions. In addition, SMR provides a variety of high-margin, niche products and components that are used to facilitate reconfigurations and conversions. Finally, SMR is aggressively targeting the general aviation market through a line of aftermarket upgrade components for the most popular commuter and general aviation aircraft types.
Consummation of this transaction will enable B/E to achieve an important strategic objective of positioning itself to handle the entire process of outfitting the cabin interior for its airline customers - from the conceptualization and engineering design of new cabin interiors, to the supply of leading-edge cabin interior products, through the management of the final integration, installation and certification. In addition, like B/E, SMR's services are performed primarily on an aftermarket basis, and its customer base includes UAL, JAL, British Airways, Air France, Cathay Pacific and Qantas, as well as Airborne Express, Federal Express and a number of other carriers and aircraft OEM's.
The purchase price for the acquisition is expected to be approximately $142 million, equal to seven times EBITDA. The acquisition is expected to be accretive to B/E's earnings per share in both fiscal 1999 and fiscal 2000. B/E will issue four million shares of B/E common stock to the Sellers at the closing of the transaction. To facilitate disposition of these shares in an orderly fashion, the Company expects to file a registration statement with the SEC and distribute the shares in an underwritten offering during September. The difference between the proceeds from the sale of the shares being issued to the Sellers and the $142 million purchase price will be provided from B/E's credit facilities. A portion of the purchase price is expected to be allocated to in-process research and development and expensed at the date of the acquisition in accordance with generally accepted accounting principles.
B/E Chairman Amin J. Khoury stated, ''The Company is extremely pleased to have finally realized its long-sought objective of developing the broad-range design, engineering, manufacturing and certification skills required to become a cabin interior prime vendor to the world's airlines. It's an objective and a vision we have had since we founded the Company 11 years ago. B/E Aerospace has worked closely with SMR on a number of cabin reconfigurations, including both the Northwest DC9 and United Airlines fleet overhauls. We look forward to proactively offering such fleet design and overhaul services to the world's airlines.''
B/E Aerospace, Inc. designs, manufactures, sells and services a broad line of commercial aircraft and general aviation cabin interior products, including seating products, cabinetry, passenger entertainment systems, a full line of passenger and crew oxygen and protective breathing equipment, passenger service systems and components and a complete line of food and beverage preparation and storage equipment. B/E Aerospace is the world's leading supplier of cabin interior products and services, serving virtually all the world's airlines, aircraft manufacturers and business jet owners.
This press release contains forward-looking statements that involve risks and uncertainties that may cause the Company's actual experience to differ materially from that anticipated. Factors that might cause such a difference include, but are not limited to, those discussed in the Company's filings with the Securities and Exchange Commission, including its most recent Form 10-Q, proxy statement and Form 10-K/A, and in ''Risk Factors'' in its Form S-4 filed on March 9, 1998, relating to the Company's recent senior subordinated notes offering, as well as future events that have the effect of reducing the Company's available cash balances, such as unexpected operating losses or delays in the integration of the Company's acquired businesses or the delivery of the MDDS interactive video system or capital expenditures or cash expenditures related to possible future acquisitions. |
