TransDigm Group Incorporated announced it has entered into a definitive agreement to acquire Cobham Aero Connectivity ("CAC" or "the Company") for approximately $965 million in cash, including tax benefits. Additionally, TransDigm provided an update with regard to its previously announced plans to potentially divest a select number of defense-oriented operating units that were acquired as part of the Esterline acquisition.

Acquisition of Cobham Aero Connectivity ("CAC")

Cobham Aero Connectivity is headquartered in Marlow, UK. The Company is a leading provider of highly engineered antennas and radios for the aerospace end market. The products are primarily proprietary with significant aftermarket content and have a strong presence across major defense platforms as well as select commercial applications. The Company is expected to generate approximately $225 million in revenue in 2020. Nearly 60% of CAC's revenue is derived from international sales, and the Company has a strong presence across a diverse range of both helicopters and fixed wing aircraft. The Company operates from two primary facilities in Marlow, UK and Prescott, Arizona. CAC employs approximately 760 people.

The acquisition, which is expected to close during the first calendar quarter of 2021, is subject to regulatory approvals and customary closing conditions. The acquisition is expected to be financed through existing cash on hand.

Potential Divestitures of Former Esterline Operating Units

The operating units under consideration for potential divestiture were acquired by TransDigm in March 2019 as part of the Esterline Technologies acquisition. Since the acquisition, these businesses have functioned as independent operating units under TransDigm's ownership. These operating units primarily serve the defense end market and have combined annual revenue of $250 to $300 million. TransDigm is now working with outside advisors to assist in the process of identifying and approaching potential buyers. At this time, the timeline for any announced divestitures remains uncertain.

W. Nicholas Howley, TransDigm's Executive Chairman, stated, "We are pleased to announce the acquisition of Cobham Aero Connectivity. This business fits well with our long-standing strategy. The CAC products are almost all proprietary and over 70% of CAC's revenue comes from the aftermarket. The Company is primarily a defense business. The businesses we are considering for divestiture are also good businesses, but do not fit as well with our long-standing proprietary and aftermarket strategy."

Kevin Stein, TransDigm's President and Chief Executive Officer, added, "We are excited about the acquisition of Cobham Aero Connectivity. The Company has established positions across a diverse range of new and existing aircraft platforms. Major customers include Airbus, Boeing, Raytheon Technologies, AgustaWestland/Leonardo and Elbit. We also see significant opportunity for ongoing upgrade and retrofit activity as the demand for faster and more data intensive communication continues. As with all TransDigm acquisitions, we expect the CAC acquisition to create equity value in-line with our long-term private equity-like return objectives."