On July 1st, Boeing announced its acquisition of Spirit AeroSystems in an all-stock deal valued at $4.7 billion on an equity basis and $8.3 billion on an enterprise basis. This move caused shares of both companies to rise, with Boeing offering $37.25 per share to Spirit AeroSystems’ shareholders, representing a 13.3% premium. However, the ultimate value to shareholders will depend on Boeing’s stock price at the time of closing in 2025.
Spirit AeroSystems generates most of its revenue from Boeing, which raises questions about the deal’s potential for revenue growth. The company’s financials show consistent net losses and cash outflows, with a gross profit margin of only 3.4%. Despite potential cost-saving opportunities, such as reducing interest expenses and other income items, the transaction’s success hinges on Spirit AeroSystems divesting its Airbus-related operations.
Boeing’s purchase of Spirit AeroSystems carries risks due to the lack of detail provided to investors. The transaction may be overpriced if cost-cutting measures do not materialize. Investors who believe in Boeing’s success may see Spirit AeroSystems as a way to gain additional upside, but caution is advised due to uncertainties surrounding the exchange ratio.
Overall, the acquisition presents a neutral outlook for both companies. While the probability of the deal going through is high, the success of Boeing will ultimately determine Spirit AeroSystems’ future. Investors are encouraged to assess the risks and rewards before making investment decisions in light of the transaction.