Boeing bid for Spirit AeroSystems values 737 supplier at US$35 per share

Boeing has offered to acquire Spirit AeroSystems Holdings in a deal funded mostly by stock that values the key supplier at about US$35 per share, according to people familiar with the matter.

Boeing switched its proposed funding from an all-cash offer with the finish line in sight after months of talks between the companies, said the people, who asked not to be identified discussing the confidential matter.

A US$35 per share valuation would represent a premium of about 6 per cent to Spirit’s stock as at June 24’s close. It is also a 22 per cent upside to its closing price on Feb 29, the day before Boeing’s takeover talks became public. 

A Boeing representative declined to comment on the decision to move to an all-stock deal, which was earlier reported by The Wall Street Journal.

“We continue to focus on providing the best quality products for our customers,” said Mr Joe Buccino, a spokesman for the Wichita, Kansas-based Spirit.

The change in capitalisation should ease some of the squeeze on the cash-strapped plane maker, the people said.

The final terms are still being hammered out and could include a small amount of cash, they said.

Boeing’s decision to revise the payment terms is the latest twist in an unusually complex transaction, which will also require Spirit to spin off some of its manufacturing plants to Airbus.

The move will require more due diligence, but is not seen as a deal-killer. The three-way transaction is still expected to be announced within a matter of days, said the people. 

Boeing chief financial officer Brian West had signalled in May that the company was exploring all payment options to preserve its investment grade rating – and cash. The US plane maker’s financial pressures have mounted as it deals with a sweeping crisis involving its cash cow, the 737 Max jet, and federal investigations.

Acquiring Spirit AeroSystems, Boeing’s former Wichita division, would reverse the embattled plane maker’s largest outsourcing foray nearly two decades ago and give it greater control over the quality of manufacturing of its jetliner structures.

Boeing is on pace to burn through about US$8 billion (S$10.8 billion) in cash during the first half of 2024 as it slows work in its factory to retrain mechanics and address quality lapses.

The company sold more than US$10 billion in bonds in late April to help fund operations, bringing its total debt load to US$58 billion. BLOOMBERG