Boeing to acquire Spirit AeroSystems in $8.3B deal

Boeing announced a few minutes after midnight July 1, 2024, it entered into a definitive agreement to acquire Spirit AeroSystems. The merger is an all-stock transaction at an equity value of approximately $4.7 billion. The total transaction value is approximately $8.3 billion, including Spirit's last reported net debt.

The price of $37.25 per share represents a 30% premium to Spirit’s closing stock price of $28.60 on February 29, 2024, the last day before Spirit and Boeing issued press releases confirming they were in discussions regarding a potential transaction.

Spirit AeroSystems is one of the world's largest manufacturers of aerostructures for commercial airplanes, defense platforms, and business/regional jets. With expertise in aluminum and advanced composite manufacturing solutions, the company's core products include fuselages, integrated wings and wing components, pylons, and nacelles. Spirit also serves the aftermarket for commercial and business/regional jets.

Created after Boeing sold its Kansas and Oklahoma operations in 2005, Wichita, Kansas-based Spirit became an aerostructures supplier to both Boeing and Airbus. Notably, Spirit produces all B737 MAX fuselage sections, shipped by rail to Renton, Washington, for final assembly.

“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,” said Patrick M. Shanahan, Spirit’s president and CEO. “Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems.”

"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 Boeing President and CEO Dave Calhoun. "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 – centered on safety and quality."

Boeing's acquisition of Spirit will include substantially all Boeing-related commercial operations, as well as additional commercial, defense, and aftermarket operations. As part of the transaction, Boeing will work with Spirit to ensure the continuity of operations supporting Spirit's customers and programs it acquires, including working with the U.S. Department of Defense and Spirit defense customers.

Airbus assets to be spun off
Spirit also entered into a binding term sheet with Airbus SE, under which the parties will continue to negotiate in good faith toward agreements for Airbus to acquire Spirit assets that serve Airbus programs, concurrent with the closing of Spirit’s acquisition by Boeing. The closings of these transactions, pending all approvals, are expected to occur in mid-2025.

Spirit AeroSystems (Europe) Ltd. is one of the largest airframe suppliers to Airbus and is a key supplier of major wing structures. Commercial work packages Spirit performs for Airbus include the production of A350 fuselage sections in Kinston, North Carolina, and St. Nazaire, France; A220 wings and mid-fuselage in Belfast, Northern Ireland, and Casablanca, Morocco; as well as of the A220 pylons in Wichita, Kansas.

In addition, Spirit also plans to pursue divestiture of business and operations in Subang, Malaysia; Prestwick, Scotland that support Airbus programs; and Belfast, Northern Ireland other than those supporting Airbus programs.

Airbus management issued a statement saying, “With this agreement, Airbus aims to ensure stability of supply for its commercial aircraft programs through a more sustainable way forward, both operationally and financially, for the various Airbus work packages that Spirit AeroSystems is responsible for today.”

The transaction would cover the acquisition of these activities. Airbus will be compensated by payment of $559 million from Spirit AeroSystems, for a nominal consideration of $1.00, subject to adjustments based on the final transaction.

“While there’s no guarantee that a transaction will be concluded, all parties are willing and interested to work in good faith to progress and complete this process as timely as possible,” the Airbus statement concluded.

Shanahan said, “We are proud of the part we have played in Airbus’ programs and believe bringing these programs under Airbus ownership will enable greater integration and alignment.”

The definitive merger agreement with Boeing and the term sheet with Airbus were unanimously approved by the Spirit Board of Directors. However, Spirit’s merger agreement with Boeing is subject to completing the divestiture of Spirit’s Airbus businesses. Closing the Airbus transaction requires concurrent closing of Boeing’s acquisition of Spirit and will be subject to other closing conditions and regulatory approvals.

A spirited history
Boeing and Spirit’s collaboration dates to 1929, when Boeing’s predecessor, United Aircraft and Transport Corp., purchased Stearman Aircraft Co. in Wichita, Kansas. Boeing Wichita produced some of history’s most iconic aircraft, including the B-29 Superfortress bomber, the B-47 Stratojet, and the B-52 Stratofortress. In 1996, Boeing purchased Rockwell International’s operations in Oklahoma. In 2005, Boeing sold its Wichita division and Oklahoma operations. The new company created, Spirit AeroSystems, began the transformation from a single-source supplier into an independent global supplier with multiple customers and platforms.

In 2006, Spirit AeroSystems acquired BAE Systems’ aerostructures business unit, which traced its lineage back to Scottish Aviation Ltd. (1935). Spirit acquired Bombardier’s aerostructures business in 2019, with a heritage dating to Short Brothers (1910s) which Bombardier acquired in 1989 and expanded in Belfast and Casablanca, adding an MRO facility in Dallas, Texas.