Héroux-Devtek to focus on its core landing gear operations with the sale of Aerostructure product line and Industrial Products for C$300 million
Transaction includes the sale of substantially all of its Aerostructure
and Industrial Products operations to Precision Castparts Corp. for
Transaction expected to close in the second quarter of this fiscal year
Héroux-Devtek to focus on its growth opportunities in its core Landing
- Héroux-Devtek to evaluate options for the use of proceeds including a significant distribution to shareholders
LONGUEUIL, QC, July 17, 2012 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), a leading Canadian manufacturer of aerospace products, today announced that it has executed a definitive agreement for the sale of substantially all of its Aerostructure and Industrial Products operations to Precision Castparts Corp. (NYSE: PCP) for C$300 million in cash, subject to post-closing adjustments. Héroux-Devtek expects to realize net cash proceeds of approximately C$230 million from the sale, after related taxes and expenses. Going forward, the Corporation will focus on growth opportunities in its core Landing Gear operations, leveraging its market-leading position in the sector.
The transaction, which has been unanimously approved by Héroux-Devtek's Board of Directors, is expected to close in the second quarter of the current fiscal year and is subject to customary regulatory approvals and other approvals for this type of transaction. The transaction is not subject to shareholders' approval.
Assets to be acquired by Precision Castparts Corp. include Héroux-Devtek's Dorval (Quebec), Querétaro (Mexico) and Arlington (Texas) Aerostructure manufacturing sites, as well as the Cincinnati (Ohio) Industrial Products manufacturing sites. The assets to be sold generated sales of approximately $130 million for the fiscal year ended March 31, 2012.
Following the closing of the transaction in the second quarter of the current fiscal year, the Corporation will retain all of its Landing Gear design engineering and manufacturing capabilities that have allowed it to set the industry standards on various platforms over the years and will have more than 1,000 employees in Canada and the U.S. The pro forma entity has revenues of more than $250 million.
Héroux-Devtek is currently evaluating various alternatives for the anticipated proceeds, including a significant distribution to shareholders and certain debt repayment.
"The sale of the Aerostructure and Industrial Products operations represents an opportunity to crystallize substantial value for our shareholders and allows Héroux-Devtek to focus on its core Landing Gear operations", said Mr. Claude Boivin, Chair of the Corporation's Special Committee which is overseeing the transaction. "We have evaluated and continue to evaluate attractive opportunities for the Corporation and will consider the most effective and efficient options for distribution and redeployment of proceeds from the transaction. "
Mr. Gilles Labbé, President and CEO of Héroux-Devtek, said: "We believe this transaction generates significant value for our shareholders. More importantly, we will continue to create value going forward as a publicly-traded corporation through a combination of organic growth and acquisition initiatives in the landing gear market, as we leverage our core strengths and leading position. Several exciting growth opportunities are available to Héroux-Devtek and our stronger financial position following this transaction will position us favourably to further expand our landing gear market penetration. Our vision continues to build the Corporation into a Quebec-based, world-class organization in this core market."
Mr. Labbé continued: "Precision Castparts is a worldwide, diversified manufacturer of complex metal components and products. They are highly anticipating the inclusion of the dedicated Héroux-Devtek Dorval, Arlington, Querétaro and Cincinnati employees, who I warmly thank for contributing to our success, into their business to continue executing their growth strategy. As such, this is a "win-win" transaction for all parties involved".
National Bank Financial Inc. acted as exclusive financial advisor to Héroux-Devtek and the Special Committee. Fasken Martineau DuMoulin LLP and Hogan Lovells LLP acted as legal counsel to Héroux-Devtek.
ABOUT HÉROUX-DEVTEK, INC.
Héroux-Devtek Inc. (TSX: HRX), a Canadian company, serves two main market segments: Aerospace and Industrial Products, specializing in the design, development, manufacture and repair and overhaul of related systems and components. Héroux-Devtek Inc. supplies both the commercial and military sectors of the Aerospace segment with landing gear systems (including spare parts, repair and overhaul services) and airframe structural components. The Corporation also supplies the industrial segment with large components for power generation equipment and precision components for other industrial applications. Approximately 70% of the Corporation's sales are outside Canada, mainly in the United States. The Corporation's head office is located in Longueuil, Québec with facilities in the Greater Montreal area (Longueuil, Dorval, Laval and St-Hubert); Kitchener and Toronto, Ontario; Arlington, Texas; Springfield, Cleveland and Cincinnati, Ohio, as well as Querétaro, Mexico.
ABOUT PRECISION CASTPARTS CORP.
Precision Castparts Corp. is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power, and general industrial markets. PCC is the market leader in manufacturing large, complex structural investment castings, airfoil castings, forged components, and highly engineered, critical fasteners for aerospace applications. In addition, the Company is the leading producer of airfoil castings for the industrial gas turbine market. PCC manufactures extruded seamless pipe, fittings, forgings, and clad products for power generation and oil & gas applications; commercial and military airframe aerostructures; and metal alloys and other materials to the casting and forging industries.
Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of the Corporation. These statements are based on suppositions and uncertainties as well as on management's best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for the Corporation's products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.
President and Chief Executive Officer
Tel.: (450) 679-3330
Executive Vice-President and Chief Financial Officer
Tel.: (450) 679-3330
Martin Goulet, CFA
Tel.: (514) 731-0000