Rockwell Collins Buys B/E Aerospace

Rockwell Collins Buys B/E Aerospace

Rockwell Collins is an avionics company that is one of the suppliers for aircraft manufacturer Boeing. It has recently spent $6.4 billion to take over B/E Aerospace. The move shows that the company believes in a future with airplanes getting smarter and smarter. In the near future airplanes are going to benefit from the latest technology. It is going to be integrated in the plane, working seamlessly in real time. Also, the technology will gather data and transmit it to airline crews as well as maintenance workers that are on the ground.

The Largest Buy Ever for Rockwell Collins

Rockwell Collins is an avionics company with 83 years of history behind it. This is the largest acquisition that the company has made to date. Until now, the priciest buy for Rockwell Collins had been the takeover of Arinc for $1.39 billion. The company bought Arinc in 2013. Back then, it had recently appointed a new CEO, Kelly Ortberg. The takeover was one of the first moves for the new CEO. Joining forces with Arinc meant that Rockwell Collins had new ways of transmitting data to airplanes.

B/E Aerospace is one of the largest equipment suppliers for aircraft cabins. So this is an opportunity for Rockwell Collins to be able to offer new information in real time to airline operators.

Rockwell Collins CEO, Kelly Ortberg recently gave an interview about taking over B/E Aerospace.

“It sets us up for the future. We’ve made major investments in next-generation airplanes. That trend is going to translate into the interiors of aircraft.”

Said Kelly Ortberg.

Working Together on a Smarter Airplane

The transaction broadens the product portfolio of Rockwell Collins. Since 2001, the company has focused on aircraft communications as well as computing equipment. Now, Rockwell Collins can bring next generation technology to aircraft cabins.

The deal is going to close in early 2017. It is just one in a string of mergers between suppliers to large companies like Boeing and Airbus. The past decade has been a good one in terms of sales for the aircraft industry. But now those companies are preparing for slower growth. That is something that the suppliers are going to feel.

Richard Aboulafia is an aerospace analyst for Teal Group. He says that the deal is an opportunity for the avionics company.

“It’s an opportunity to build a smarter plane. Given the pricing pressure, you’ll probably see more deals like this.”

Said Richard Aboulafia.

B/E Aerospace is one of the largest suppliers of equipment for aircraft cabins. They make everything from modular lavatories to luxurious seats that can be just as expensive as a Ferrari. Between the two portfolios of the two companies there is almost no overlap. So the two companies are mostly complementary.

According to estimates, the merger is going to save $160 million. The two companies are going to combine suppliers and eliminate headquarters functions that overlap. That alone is going to get them the saving mentioned above. But the merger is also going to open up new opportunities for sales. The resources of the two companies combined can bring in new sales. Rockwell Collins and B/E Aerospace can create synergy and make the most of their base of business aviation dealers.

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