Boeing, the American aerospace giant, has announced its intention to acquire Spirit AeroSystems for $4.7 billion in an all-stock transaction. Spirit AeroSystems is a significant supplier of components for Boeing's commercial planes, including the body of the 737 Max and parts of the 767, 777, and 787.
The acquisition comes after years of outsourcing production to independent suppliers in an effort to cut costs. However, recent quality problems at Spirit AeroSystems have led Boeing to reconsider this strategy. By acquiring Spirit outright, Boeing hopes to improve the supplier's production practices and ensure better alignment with its own safety and quality systems.
Spirit AeroSystems generates around 70% of its revenue from Boeing, making it a crucial partner for the plane maker. The two companies have faced intense scrutiny in recent months following a near-catastrophic incident in which a fuselage panel blew off a 737 Max mid-flight. Regulators and the flying public have called for greater oversight and accountability from both Boeing and its suppliers.
Boeing's acquisition of Spirit AeroSystems is expected to close by the middle of next year, subject to regulatory approval and other conditions. Airbus, Spirit's other major customer, will be compensated $559 million for acquiring its manufacturing lines dedicated to Airbus planes.
The deal represents a strategic reversal for Boeing, which began outsourcing production extensively in the 2000s. Spirit was created during this period as a result of Boeing's decision to sell off operations in Wichita, Kansas, and Oklahoma. In addition to its work for Boeing and Airbus, Spirit makes components for other aerospace companies including Bombardier, Lockheed Martin, Northrop Grumman, and Rolls-Royce.
Boeing offered to buy Spirit at $37.25 per share, a 30% premium over its stock price before the two companies announced they were in talks. The acquisition is valued at $8.3 billion when including Spirit's debt.
