Following months of negotiations over a deal the American planemaker believes will help ease a spiraling safety issue, Spirit AeroSystems and Boeing reached an agreement on Sunday for a purchase valued at over $4 billion, according to two individuals familiar with the subject.
According to the two sources, Boeing will acquire Spirit Aero for $37.25 per share in an all-stock transaction. Following their Sunday meeting, the boards of Spirit and Boeing reached an agreement, and they stated an official announcement is expected early on Monday.
Spirit is valued at approximately $4.7 billion as a result of the deal, one of the sources claims.
Spirit would be split up as a result of the acquisition, which is pending regulatory permissions; some of the assets of the Kansas-based supplier would be transferred to the French aircraft manufacturer Airbus.
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Boeing is trying to get over a year of challenges brought on by a door plug explosion on a new 737 MAX 9 aircraft that occurred in midair on January 5 and revealed other safety and quality issues. These problems have caused a significant slowdown in Boeing’s production, which has repercussions for the whole commercial aviation sector worldwide.
The door plug maker, Spirit, was separated from Boeing in 2005 as part of a sequence of actions that some claim demonstrated a preference for cost-cutting over quality.
Following the Jan. 5 incident, which involved an Alaska Airlines flight, Boeing decided to repurchase Spirit in an attempt to address its safety issues and support its manufacturing line.
It was unclear at first what Spirit would receive in exchange for selling Airbus its business in Europe.
According to those with knowledge, both agreements were scheduled to be revealed simultaneously early on Monday. The two transactions represent a transatlantic division of the largest independent aerostructures manufacturer in the world, which, since being split off by Boeing almost 20 years ago, has expanded to produce parts for Airbus and other manufacturers.
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The Federal Aviation Administration put a limit on manufacturing of Boeing’s best-selling MAX jets after the January incident, and officials from the U.S. Department of Justice are threatening to prosecute the planemaker if they find that it broke a deal after the deadly MAX crashes in 2018 and 2019.
Boeing’s problems won’t be solved right away by purchasing Spirit Aero. The venerable American corporation has been losing market share to Airbus for years, and it is currently coping with the fallout from two crashes that resulted in the forced grounding of the 737 MAX and almost 350 fatalities.
Due to the manufacturer’s troubles, these collisions resulted in the appointment of the current CEO, Dave Calhoun, who will depart later this year with the company facing increased regulatory scrutiny and a damaged reputation.
On June 18, U.S. senators asked Calhoun several times about his pay and delivered a scathing critique of the planemaker for his safety concerns. Due to supply delays and the company’s persistent problems, some airlines have publicly and privately expressed their unhappiness with Boeing.
Recently, Boeing provided the FAA with a detailed plan to remedy “systemic quality-control issues” within the firm.