Tuesday January 14, 2020 0 comments
FORT COLLINS & STAMFORD, Conn. -- Woodward, Inc. (NASDAQ: WWD) and Connecticut-based Hexcel Corporation (NYSE: HXL) announced a definitive agreement to combine in an all-stock merger of equals to create a premier integrated systems provider serving the aerospace and industrial sectors.
The combined company will focus on technology-rich innovations to deliver smarter, cleaner, and safer customer solutions.
Under the terms of the agreement approved by the boards of directors of both companies, Hexcel shareholders will receive a fixed exchange ratio of 0.625 shares of Woodward common stock for each share of Hexcel common stock, and Woodward shareholders will continue to own the same number of shares of common stock in the combined company as they do immediately prior to the closing.
The exchange ratio is consistent with the 30-day average share prices of both companies. Upon completion of the merger, existing Woodward shareholders will own approximately 55% and existing Hexcel shareholders will own approximately 45% of the combined company on a fully diluted basis.
In connection with the transaction, Woodward is increasing its quarterly cash dividend to $0.28 a share.
The merger is expected to be tax free for U.S. federal income tax purposes.
The combined company, to be named Woodward Hexcel, will be among the top independent aerospace and defense suppliers globally by revenue.
It will have more than 16,000 employees, manufacturing operations in 14 countries on five continents, and a diversified customer base across multiple markets.
For each company’s respective fiscal year 2019 on a pro forma basis, the combined company is expected to generate net revenues of approximately $5.3 billion and EBITDA of $1.1 billion, or a 21% EBITDA margin.
Nick Stanage, chair, CEO and president of Hexcel, will serve as CEO of the combined company. Tom Gendron, chair, CEO and president of Woodward, will serve as executive chair of the combined company until the first anniversary of the closing of the merger, at which time Gendron intends to retire from the company and will then serve as non-executive chair of the combined company until the second anniversary of the merger close.
At that point, Stanage will assume the role of chair of the board in addition to his CEO responsibilities. The combined company’s board of directors will have 10 members, consisting of five directors from each company, including Gendron and Stanage.
“Our two companies are each independently working toward addressing the sustainability and efficiency needs of our customers,” Gendron said.
“This merger accelerates our technology investments and creates greater benefits and growth opportunities than either company could have achieved alone. Both Woodward and Hexcel have attractive growth trajectories, with strong aftermarket positions and increased composite penetration driving our respective outlooks.
“Our complementary cultures and shared commitment to operational excellence and customer satisfaction, together with our enhanced financial strength, will position us to better serve our OEM and aftermarket customers.
“We will be stronger together and are committed to delivering even greater value to all our stakeholders.”
“The future of flight and energy efficiency will be defined by next-generation platforms delivering lower cost of ownership, reduced emissions, and enhanced safety – and a combined Hexcel and Woodward will be at the forefront of this evolution,” said Stanage.
“Woodward’s innovative control systems and Hexcel’s advanced lightweight materials are designed to drive improved reliability, efficiency, and emissions. Through our combined scale and strong cash flow profile, we will be even better positioned to accelerate innovation in aerodynamics and propulsion efficiencies and support evolving customer needs.
“I am incredibly excited about what we can accomplish by uniting these two premier companies and world-class teams with similar values, cultures, and operating philosophies.”
Woodward Hexcel will be headquartered in Fort Collins.