SPR - Boeing's Big Purchase Of Spirit AeroSystems Is Questionable

2024-07-01 20:50:44 ET

Summary

• Boeing agreed to acquire Spirit AeroSystems in a multi-billion dollar transaction.
• The deal structure allows for exchange ratio adjustments based on Boeing's stock price, offering potential upside for Spirit AeroSystems shareholders.
• The transaction raises concerns about cost savings and revenue growth for Boeing, with risks outweighing potential benefits.

July 1st was definitely an interesting day for shareholders of both The Boeing Company ( BA ) and Spirit AeroSystems Holdings ( SPR ). Shares of both businesses moved a bit higher after both companies announced that Boeing will be acquiring Spirit AeroSystems in an all-stock transaction valued at $4.7 billion on an equity value basis and at about $8.3 billion on an enterprise value basis. This is an intriguing transaction that's different than most deals that most companies make. Usually, the goal here is to significantly expand the revenue base of the acquirer. But this is an odd transaction because the vast majority of the revenue currently generated by Spirit AeroSystems comes from its suitor....

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