Boeing Suppliers Woodward and Hexcel to Merge

By Doug Cameron 

Woodward Inc. and Hexcel Corp. set plans to merge, a deal that would combine two big Boeing Co. suppliers as aerospace companies grapple with fallout from the grounding and halted production of the 737 MAX.

The two U.S. companies produce parts and spares for Boeing and Airbus SE jets as well as a range of military aircraft. They said on Sunday that their proposed deal would help accelerate research and development spending on new technologies. Together, Woodward Hexcel would rank among the aerospace industry's largest suppliers, with combined sales of $5.3 billion last year and 16,000 staff.

The deal would be the first big transaction in the industry since Boeing said it would freeze production of the MAX. Many potential deals have been placed on hold or abandoned because of uncertainty over future production of the MAX, said aerospace bankers.

Both Woodward and Hexcel have reported a limited impact on their businesses since MAX production was reduced last year. But they have said sales of spares have been hit by the absence of deliveries.

Fort Collins, Colo.-based Woodward makes cockpit systems and actuators -- the motors that control wing flaps and other flight-critical functions -- for commercial and military aircraft. Stamford, Conn.-based Hexcel is a specialist in composite materials such as carbon fiber, which are increasingly used in aircraft and their engines systems.

Boeing has been moving production of some of that work in house, opening its own actuator plant in the U.K., and has considered buying Woodward in the past.

The proposed deal would be structured as a merger of equals, with Woodward shareholders owning 55% of the combined entity. Hexcel Chief Executive Nick Stanage would lead the combined company with Woodward CEO Tom Gendron becoming executive chairman.

The proposed terms call for Hexcel shareholders to receive 0.625 Woodward shares for each one they hold.

Write to Doug Cameron at [e-mail]

(END) Dow Jones Newswires

January 12, 2020 17:00 ET (22:00 GMT)

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