15th Sep 2008 08:04
GKN plc
GKN accelerates growth in Aerospace with acquisition of Airbus operation
* Agreement to acquire Airbus Filton manufacturing operation * GKN secures "life of programme" contracts on current Airbus aircraft * GKN becomes strategic partner on Airbus A350 XWB
GKN plc of the UK today announces that it has agreed to acquire the wing component manufacturing and assemblies operation which is located on the Airbus Filton site in the UK.
Airbus has also awarded GKN life of programme contracts on all existing Airbus programmes for the Filton operation.
GKN has also signed contracts for significant work packages to design and produce large scale composite structures for the wing of the new A350 XWB (Extra Wide Body) long haul airliner.
In 2009, the first full year under GKN's ownership, it is expected that the Filton operation will have revenues of approximately ‚£375 million and will be both earnings accretive and cash generative.
The combination of the acquisition of the Filton wing component manufacturing and assemblies operation and the A350 work packages delivers considerable benefits.
* GKN becomes a leading global player in critical wing structures and
composites.
* The Group order book for large civil aircraft structures increases from
$4.5 billion to approximately $10 billion.
* A strategic supplier relationship is established with Airbus.
* GKN achieves a more balanced mix of business across the civil and defence
sectors and between Europe and North America.
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GKN Chief Executive, Sir Kevin Smith, said "The acquisition of the Filton wing components and assemblies manufacturing operation is a further exciting step in the development of GKN's Aerospace business. The strategic logic is compelling. It brings a long term partnership with Airbus and a strong order backlog which supports solid growth. In addition, the position secured on A350 XWB provides future growth at the leading edge of aerospace composites manufacturing technology.
"Filton is already a centre of excellence in metallic structures for Airbus and we intend to invest in the operation so that it also becomes a centre of excellence in composite wing structures serving the global aerospace market. The GKN team looks forward to welcoming those Filton employees who will be transferring to us."
The Filton operation, which was part of a larger cost centre under Airbus ownership, is being acquired for a total consideration of ‚£136 million. An initial payment of ‚£100 million will be made on completion with the balance of ‚£36 million payable in annual instalments over the years 2010-2015. The consideration is being met from existing resources. GKN will also assume future pension obligations in respect of transferring employees at completion. The value of the gross assets of the business being acquired was ‚£89 million as at April 30, 2008.
The Filton wing component and assemblies operation being acquired by GKN employs approximately 1,500 people and has been developed by Airbus as a centre of excellence for wing structures. It is a manufacturing and assembly specialist for metallic wing components and assemblies such as leading and trailing edges, ribs and pylons. It supplies the full range of Airbus aircraft including the A320 family, A330/340 family, A380 and A400M.
GKN intends to invest ‚£125 million over five years to further develop the Filton business as global centre of excellence in composite wing structures as part of its participation on the A350 XWB. This new generation aircraft will feature an all-composite wing using the latest composite material and automated manufacturing technologies.
Today's announcement follows the decision by Airbus in December last year to select GKN as its preferred partner for the acquisition of the Filton operation on the outskirts of Bristol. The acquisition is subject to regulatory approval and is expected to complete at the end of the year.
Gleacher Shacklock LLP is acting as adviser to GKN Aerospace.
For further information:GKN Corporate CommunicationsT:+44 (0)207 463 235415 September 2008Note:
In this announcement references to earnings are before restructuring and impairment charges, amortisation of non-operating intangible assets and other non-cash charges arising on business combinations, profits and losses on sale or closure of businesses and changes in fair value of derivative financial instruments and after tax at a cash tax rate of 17%.
A live webcast will be available at 10.00 BST at www.gkn.com followed by a Question and Answer session for analysts and institutional investors.
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