Astronics Corp., looking to boost its test systems business and expand into the commercial aerospace market, has agreed to acquire EADS North America's Test and Services (EADS T&S) unit for $53 million.
The New York-based aircraft lighting and electronics manufacturer expects the purchase agreement to close in February. Irvine, Calif.-based EADS T&S provides engineered Automatic Test Systems (ATS), subsystems and instruments for commercial aerospace and defense operators.
Peter Gundermann, CEO of Astronics, said the purchase would allow his company to take advantage of EADS T&S's successful expansion into becoming a commercial aerospace supplier, a challenge that Astronics has not been as effective at tackling during the recent significant reduction in defense spending in the United States and abroad.
"We like the EADS business also because it has a proven ability to diversify and find new markets, especially at this time where the defense industry is in a bit of a lull. In fact, in 2013, more than half of the revenues for the EADS business were from the commercial market," said Gundermann during a conference call with investors.
The EADS acquisition follows the December 2013 closing of Astronics' purchase of European in-flight entertainment/communications systems' provider PGA Electronic.
The chief executive said his company is accustomed to competing in the same markets where EADS has against major aerospace and defense companies such as Boeing, Northrop Grumman and Lockheed Martin.
In 2013, EADS T&S had sales of $70 million, and Astronics is projecting the business will increase that to $100 million in 2014.
Whereas Astronics excels in the software portion of automated testing, Gundermann said that the acquisition of EADS T&S will strengthen the company's proficiency on the hardware and automation side, and in continued market diversification. “EADS T&S has developed a strong presence in a diversified set of industries, which provides a broad range of market opportunities for growth," he said.