Senior swoops in with bid for AMT
International manufacturer, Senior plc, has made a £58.7m approach for Aerospace Manufacturing Technologies, a North American manufacturer of structural aluminium parts for the commercial aerospace industry.International manufacturer, Senior plc, has made a £58.7m approach for Aerospace Manufacturing Technologies, a North American manufacturer of structural aluminium parts for the commercial aerospace industry.
The Herts-based firm intends to raise £107.3m to underpin the acquisition using a new £80m revolving credit facility and a £27.3m fully underwritten rights issue.
AMT is a Washington state-based manufacturer of structural aluminium parts for the commercial aerospace industry and counts Boeing as its principal customer. In the year ended 2005, AMT generated revenues of $33.6m (£17.8m) and brought in a pre-tax profit of $2.2m (£1.2m).
The acquisition will provide Senior with increased exposure to Boeing’s two most important existing aircraft, the Boeing 737 and Boeing 777, and also to Boeing’s new wide-bodied mid-range aircraft, the Boeing 787. AMT is experiencing a period of strong revenue and profit growth and has good future growth potential.
Senior’s directors expect the deal to be earnings enhancing throughout 2007, what would be the company’s first full year of ownership.
Upon completion of the acquisition, Senior intends to retain AMT’s entire senior management team and all of its 300 strong workforce.
Matthew Reinhard will remain as AMT’s president and CEO.
The rights issue plans to raise proceeds of approximately £27.3m before expenses. One new ordinary share will be available for every five existing ordinary shares held on the record date at 42 pence per share.
Senior will offer a price of 42 pence, which represents a 26.6 per cent discount to the closing price of existing ordinary shares of 57.25 pence on 18 September 2006.
While AMT’s principal customer is Boeing, its customer base also includes Bombardier Inc and Raytheon Company in the business jet market, and Bombardier Inc in the regional jet market.
The company’s experience and capabilities span multiple segments of an aircraft including the engine pylon, struts, wing box, wings, wheel well and the interior.
Its particular success is based on utilising proprietary manufacturing techniques to manufacture high quality, complex parts through cost effective production.
Senior believes that strong order books for the large commercial aircraft manufacturers and engine suppliers and good growth forecasts in the aerospace market provide a positive backdrop for the acquisition, which the directors believe will offer a number of significant benefits and opportunities.
These include: Increased exposure to Boeing’s two most important existing aircraft and access to significant involvement on Boeing’s new wide-bodied mid-range aircraft, the 787, which Boeing is forecasting to commence delivery to its customers in late 2008.
Senior would also take on a well-equipped modern facility – where more than £8m is expected to have been invested in the three years ending 31 December 2006 – capable of machining highly complex and value-added structural aluminium parts.
Senior has 22 operating entities based in 11 countries with over 5,200 staff. The company designs, manufactures and markets high technology components and systems for the principal original equipment producers in the worldwide aerospace, diesel engine, exhaust systems and energy markets.