Commercial, From The Wire

Boeing to Spend $4B Acquiring Parts Distributor KLX Inc

By Boeing | May 5, 2018

New acquisition KLX Inc. will be integrated with Aviall under the Boeing Global Services umbrella. Photo courtesy of Boeing

Boeing has entered a definitive agreement to acquire KLX Inc. for $4.25 billion to enhance its growing services business.

Boeing's acquisition of KLX Inc. will include the latter's Aerospace Solutions Group and is conditional upon the successful divestment and separation of KLX Inc.'s Energy Services Group.

KLX Inc. is an independent provider of aviation parts and services in the aerospace industry. Its capabilities include global parts distribution and supply chain services for aerospace and defense industries worldwide. KLX Inc. is also a supplier of chemical composites, with this combination broadening the scope of what Aviall can offer to customers in this space.

"This acquisition is the next step in our services growth strategy, with a clear opportunity to profitably grow our business and better serve our customers in a $2.6 trillion, 10-year services market," said Stan Deal, president and CEO of Boeing Global Services. "By combining the talent and product offerings of Aviall and KLX Inc., we will provide a one-stop-shop that will benefit our supply chain and our various customers in a meaningful way."

KLX Inc.'s Aerospace Solutions Group employees and operations will be integrated with Aviall, providing a clear path for the business to accelerate growth. The Miami facilities are expected to continue to remain the principal operating location.

"Our customers have long desired a supplier who could offer essentially 100% of their requirements for fasteners, consumables and expendables. The combination of Aviall and KLX Aerospace facilitates the broadest scope of parts and products to support all customer fleet types for the commercial, military and defense, and business and general aviation markets," said Amin Khoury, KLX chairman and CEO.

KLX Inc.'s Aerospace Solutions Group's fiscal year 2017 revenue was $1.4 billion. Boeing expects the acquisition to have a neutral earnings impact through 2019 and accretion thereafter, with annual cost savings growing to approximately $70 million by 2021 and further improvements realized over time. The transaction will be financed primarily with cash on hand, supplemented with debt.

The completion of the transaction is subject to customary conditions, including regulatory clearance and the approval by a majority of KLX Inc. shareholders. The sale is expected to close by third quarter 2018. The transaction is also subject to the successful divestment and separation of KLX Inc.'s Energy Services Group.

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