Boeing buys back Spirit AeroSystems in $5bn deal

Boeing has reacquired its former subsidiary and current fuselage supplier Spirit AeroSystems. The merger is an all-paper deal with an equity value of around $4.7bn, or $37.25 per share, which represents a 30% premium to Spirit’s closing stock price of $28.60 on February 29, 2024, a day before discussions were officially announced. Separate discussions took place between Spirit and Boeing's rival aircraft manufacturer Airbus. ""We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders, and the country more broadly,"" said Boeing president and CEO Dave Calhoun. The acquisition is valued at a total of approximately $8.3bn, which includes Spirit's last reported net debt. Boeing had spun off the parts supplier nearly two decades ago. Calhoun added: ""By reintegrating Spirit, we can fully align our commercial production systems, including our safety and quality management systems, and our workforce to the same priorities, incentives and outcomes"". ""After carefully evaluating Boeing’s offer to combine, we are confident this transaction is in the best interest of Spirit and its shareholders, and will benefit Spirit’s other stakeholders,"" said Spirit CEO and president Patrick Shanahan. ""Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems."" Each share of Spirit common stock will be exchanged for a number of shares of Boeing common stock equal to an exchange ratio between 0.18 and 0.25, calculated as $37.25 divided by the volume weighted average share price of Boeing shares over the 15-trading-day period ending on the second trading day prior to closing. Spirit shareholders will receive 0.25 Boeing shares for each of their Spirit shares if the volume-weighted average price is at or below $149, and 0.18 Boeing shares for each of their Spirit shares if the volume-weighted average price is at or above $206.94. On top of all Boeing-related commercial operations, the acquisition also ensures that Spirit's additional commercial, defence and aftermarket operations continue. However, as part of the deal, Airbus will assume the operations carried out by Spirit for its A350 fuselage programmes, as well as Spirit's programmes for the A220 including mid-fuselage, pylons, and wings. Airbus will take over several sites globally including France, Northern Ireland, the US, and Morocco. The transaction would also see the aircraft manufacturer compensated in a payment of $559 million by Spirit, as well as paying $1 for the lossmaking assets. Shanahan commented, ""Bringing these programs under Airbus ownership will enable greater integration and alignment."" The Airbus deal is a binding term sheet agreement and is still subject to ongoing negotiations and processes as it seeks to ensure the stability of supply for its commercial aircraft programmes. Spirit is also looking to sell off its businesses and operations in Malayasia and Scotland that support Airbus programmes, as well as in Northern Ireland that are non-Airbus programmes. Morgan Stanley is serving as lead financial advisor to Spirit. Moelis & Company is also serving as financial advisor to the company. Skadden, Arps, Slate, Meagher & Flom is serving as its legal counsel. For Boeing, PJT Partners is acting as lead financial advisor, with Goldman Sachs and Counsello acting as additional advisors. Sullivan & Cromwell is acting as outside counsel to Boeing. The closing of the transaction is expected to occur in mid-2025.