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TransDigm (TDG) Set to Purchase Raptor Scientific For $655M
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TransDigm Group, Inc. (TDG - Free Report) recently signed a contract to acquire an engineering, testing and measurement services provider, Raptor Labs Holdco, LLC., also known as Raptor Scientific. The acquiree offers complex measurement instruments that serve the aerospace and defense industry.
Per the terms of the deal, TDG is accountable for paying a purchase price of nearly $655 million in cash, including tax benefits.
Benefits of the Acquisition
Raptor Scientific’s acquisition is expected to further strengthen TransDigm’s footprint in the aerospace and defense industry, wherein TDG already enjoys a strong presence. Raptor Labs Holdco's extensive patented and highly-engineered product portfolio of aerospace and defense testing and instrumentation systems is aligned with TDG’s value generation approach.
The aforementioned factors will provide TransDigm an opportunity to expand its customer base, enhance its product offerings and increase its market share in the highly-engineered aircraft components business area.
The acquisition is also expected to create an equity value in line with TransDigm's long-term private equity-like return objectives. Overall, the acquisition is likely to be instrumental to TDG’s growth in the aftermarket business space and broadening its product portfolio, which tends to accelerate its revenue-generation prospects.
TDG’s Acquisition Spree
The military industry has seen a notable rise in mergers and acquisitions recently due to a number of factors like growing emphasis on cost-reduction initiatives, diversifying their portfolio to tackle competition and achieving economies of scale and operational efficiency to attain long-term goals. These transactions are becoming more significant, allowing businesses to grow as they see fit by expanding their operations, gaining access to new skills and developing technologies and ultimately producing higher-quality goods and services as well as larger market shares.
Being no exception, TransDigm Group has also been engaged in a number of valuable acquisitions, like the latest one, in recent times. Prior to Raptor Scientific in May 2024, the company completed its SEI Industries’ acquisition, which is a leading provider of highly engineered products for aerial firefighting and other liquid transportation solutions. In November 2023, TransDigm Group agreed to acquire Communications & Power Industries’ electron device business for a cash transaction worth approximately $1.39 billion. Such acquisitions are expected to boost TDG’s position as a component provider for the aerospace and defense market.
Peer Moves
Apart from TransDigm, other defense companies that have recently indulged in valuable acquisition deals are as follows:
In March 2024, Teledyne Technologies (TDY - Free Report) agreed to acquire Valeport Holdings 2019 Limited and its affiliates, a designer and manufacturer of underwater sensors for environmental, energy, construction and defense applications. This buyout should boost TDY’s Marine technology offerings.
TDY has a long-term (three to five years) earnings growth rate of 7.3%. The Zacks Consensus Estimate for its 2024 sales implies an improvement of 0.4% from the prior-year figure.
In July 2023, L3Harris Technologies (LHX - Free Report) completed the acquisition of Aerojet Rocketdyne for $4.7 billion to strengthen its ability in the defense industrial base, bolster competitiveness and quicken innovation for a vital propulsion systems provider. This buyout diversified LHX’s expertise in missile defense systems, hypersonics and advanced rocket engines.
LHX has a long-term earnings growth rate of 9.2%. The Zacks Consensus Estimate for its 2024 sales implies an improvement of 9.4% from the prior-year figure.
In April 2024, Curtiss-Wright Corporation (CW - Free Report) completed the acquisition of WSC, Inc. for $34 million. The buyout is expected to expand Curtiss-Wright’s portfolio of advanced commercial nuclear technologies utilized in the modernization of existing power plants and the design of new power plants, such as Advanced Small Modular Reactors.
The Zacks Consensus Estimate for CW’s 2024 sales implies an improvement of 6.3% from the prior-year figure. The stock boasts a four-quarter earnings surprise of 9.01%, on average.
Price Movement
In the past three months, shares of TransDigm have increased 11.7% compared with the industry’s growth of 5.8%.
Image: Bigstock
TransDigm (TDG) Set to Purchase Raptor Scientific For $655M
TransDigm Group, Inc. (TDG - Free Report) recently signed a contract to acquire an engineering, testing and measurement services provider, Raptor Labs Holdco, LLC., also known as Raptor Scientific. The acquiree offers complex measurement instruments that serve the aerospace and defense industry.
Per the terms of the deal, TDG is accountable for paying a purchase price of nearly $655 million in cash, including tax benefits.
Benefits of the Acquisition
Raptor Scientific’s acquisition is expected to further strengthen TransDigm’s footprint in the aerospace and defense industry, wherein TDG already enjoys a strong presence. Raptor Labs Holdco's extensive patented and highly-engineered product portfolio of aerospace and defense testing and instrumentation systems is aligned with TDG’s value generation approach.
The aforementioned factors will provide TransDigm an opportunity to expand its customer base, enhance its product offerings and increase its market share in the highly-engineered aircraft components business area.
The acquisition is also expected to create an equity value in line with TransDigm's long-term private equity-like return objectives. Overall, the acquisition is likely to be instrumental to TDG’s growth in the aftermarket business space and broadening its product portfolio, which tends to accelerate its revenue-generation prospects.
TDG’s Acquisition Spree
The military industry has seen a notable rise in mergers and acquisitions recently due to a number of factors like growing emphasis on cost-reduction initiatives, diversifying their portfolio to tackle competition and achieving economies of scale and operational efficiency to attain long-term goals. These transactions are becoming more significant, allowing businesses to grow as they see fit by expanding their operations, gaining access to new skills and developing technologies and ultimately producing higher-quality goods and services as well as larger market shares.
Being no exception, TransDigm Group has also been engaged in a number of valuable acquisitions, like the latest one, in recent times. Prior to Raptor Scientific in May 2024, the company completed its SEI Industries’ acquisition, which is a leading provider of highly engineered products for aerial firefighting and other liquid transportation solutions. In November 2023, TransDigm Group agreed to acquire Communications & Power Industries’ electron device business for a cash transaction worth approximately $1.39 billion. Such acquisitions are expected to boost TDG’s position as a component provider for the aerospace and defense market.
Peer Moves
Apart from TransDigm, other defense companies that have recently indulged in valuable acquisition deals are as follows:
In March 2024, Teledyne Technologies (TDY - Free Report) agreed to acquire Valeport Holdings 2019 Limited and its affiliates, a designer and manufacturer of underwater sensors for environmental, energy, construction and defense applications. This buyout should boost TDY’s Marine technology offerings.
TDY has a long-term (three to five years) earnings growth rate of 7.3%. The Zacks Consensus Estimate for its 2024 sales implies an improvement of 0.4% from the prior-year figure.
In July 2023, L3Harris Technologies (LHX - Free Report) completed the acquisition of Aerojet Rocketdyne for $4.7 billion to strengthen its ability in the defense industrial base, bolster competitiveness and quicken innovation for a vital propulsion systems provider. This buyout diversified LHX’s expertise in missile defense systems, hypersonics and advanced rocket engines.
LHX has a long-term earnings growth rate of 9.2%. The Zacks Consensus Estimate for its 2024 sales implies an improvement of 9.4% from the prior-year figure.
In April 2024, Curtiss-Wright Corporation (CW - Free Report) completed the acquisition of WSC, Inc. for $34 million. The buyout is expected to expand Curtiss-Wright’s portfolio of advanced commercial nuclear technologies utilized in the modernization of existing power plants and the design of new power plants, such as Advanced Small Modular Reactors.
The Zacks Consensus Estimate for CW’s 2024 sales implies an improvement of 6.3% from the prior-year figure. The stock boasts a four-quarter earnings surprise of 9.01%, on average.
Price Movement
In the past three months, shares of TransDigm have increased 11.7% compared with the industry’s growth of 5.8%.
Image Source: Zacks Investment Research
Zacks Rank
TDG currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.