Boeing announced on 1 July 2024 that it has entered into a definitive agreement to acquire Spirit AeroSystems, which was founded in 2005 when Boeing sold its Wichita division and Oklahoma operations.
The merger is an all-stock transaction at an equity value of approximately USD 4.7 billion (EUR 4.37 billion), or USD 37.25 per share. The total transaction value is approximately USD 8.3 billion, including Spirit’s last reported net debt.
A key driver behind the acquisition is Boeing’s focus on safety and quality management after the door plug on an Alaska Airlines Boeing 737 Max 9 airliner blew out while the aircraft was in mid-flight on 5 January 2024; an investigation into the incident found that Spirit AeroSystems had supplied a faulty Max 9 fuselage and that, although this was fixed on Boeing’s assembly line, the retaining bolts for the door plug were not put back in.
“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,” said outgoing Boeing President and CEO Dave Calhoun in a company press release (Calhoun will step down from his position at the end of 2024). “By reintegrating Spirit, we can fully align our commercial production systems, including our safety and quality management systems, and our workforce to the same priorities, incentives and outcomes – centred on safety and quality.”
Patrick M Shanahan, president and CEO of Spirit, was quoted on the company’s website as saying, “After carefully evaluating Boeing’s offer to combine, we are confident this transaction is in the best interest of Spirit and its shareholders, and will benefit Spirit’s other stakeholders. Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems.”
Boeing’s acquisition of Spirit will include substantially all Boeing-related commercial operations, as well as additional commercial, defence and after-market operations. As part of the transaction Boeing will work with Spirit to ensure the continuity of operations supporting Spirit’s customers and programmes it acquires, including work with the US Department of Defense and Spirit defence customers.
Spirit is involved in a number of defence programmes, substantially through its specialisation in producing complex composite structures. The company produces high-temperature composite materials used by hypersonic programmes as well other composite structures, such as the cockpit and cabin assembly of the Sikorsky CH-53K King Stallion heavy-lift helicopter.
Spirit and Airbus also entered into a binding term sheet under which Airbus will acquire, assuming the parties entered into definitive agreements and receipt of any required regulatory approvals, certain commercial work packages that Spirit performs for Airbus concurrently with the closing of the Boeing-Spirit merger.
In addition, Spirit is proposing to sell some of its operations, including those in Belfast, Northern Ireland (non-Airbus operations); Prestwick, Scotland; and Subang, Malaysia. The transaction is expected to close in mid-2025 and is subject to the sale of the Spirit operations related to certain Airbus commercial work packages and the satisfaction of customary closing conditions, including regulatory and Spirit shareholder approvals.
Under the acquisition each share of Spirit common stock will be exchanged for a number of shares of Boeing common stock equal to an exchange ratio between 0.18 and 0.25, calculated as USD 37.25 divided by the volume weighted average share price of Boeing shares over the 15-trading-day period ending on the second trading day prior to the closing (subject to a floor of USD 149.00 per share and a ceiling of USD 206.94 per share). Spirit shareholders will receive 0.25 Boeing shares for each of their Spirit shares if the volume-weighted average price is at or below USD 149.00, and 0.18 Boeing shares for each of their Spirit shares if the volume-weighted average price is at or above USD 206.94.
PJT Partners is acting as lead financial advisor to Boeing, with Goldman Sachs & Co and Consello acting as additional advisors. Sullivan & Cromwell is acting as outside counsel to Boeing.
