Bombardier agreed to sell a wing factory in Northern Ireland and two other facilities to Spirit AeroSystems Holdings for $500 million and the assumption of certain liabilities.
The Belfast operation, which incorporates technology from Puget Sound companies such as Electroimpact, makes wings for Airbus SE’s A220 jetliner, an aircraft that cash-strapped Bombardier developed as the CSeries before handing control last year to the European planemaker. The deal also covers a plant in Morocco and a maintenance, overhaul and repair shop in Dallas, Bombardier and Spirit said Thursday.
The sale caps Bombardier’s exit from the airliner business as Chief Executive Officer Alain Bellemare refocuses the manufacturer on building private jets and trains. For Spirit, buying the Belfast plant will expand its role as an Airbus supplier and lessen its dependence on Boeing Co. and the 737 MAX, which has been grounded for more than seven months after two deadly crashes.
“This acquisition is in line with our growth strategy of increasing Airbus content, developing low-cost country footprint, and growing our aftermarket business,” said Spirit CEO Tom Gentile. “The Bombardier operations bring world-class engineering expertise to Spirit and add to a strong track record of innovation, especially in advanced composites.”
The acquired operations have more than 4,000 employees and expected 2019 revenue of about $1 billion, Spirit said. Their backlog of work includes supply contracts for the A220 and Airbus’s A320neo, as well as for business and regional jets made by Montreal-based Bombardier.
The Canadian company’s shares surged 10% to C$1.75 ($1.33) at 9:41 a.m. in Toronto after advancing as much as 12% for the biggest intraday gain in almost five months. Bombardier jumped even after third-quarter financial results fell short of analysts’ expectations. Spirit, which also missed earnings estimates, climbed 3.7% to $81.99.
As part of the agreement, Spirit said it would assume about $300 million in net pension liabilities, and approximately $290 million of government grant repayment obligations, bringing the total value of the transaction to $1.09 billion. That’s 10 times the estimated earnings before interest, taxes, depreciation and amortization of the acquired businesses, Spirit said.
The Wichita, Kansas-based company will also make a cash contribution of about $130 million toward pension liabilities. The deal, which is subject to regulatory approval, is expected to close in the first half of next year.