GKN to acquire aerospace components manufacturer

GKN plc announced August 3 that it has agreed to acquire Stellex Aerostructures, a leading specialist in the manufacture of complex, metal structural components for the aerospace industry.

The combination of GKN's existing advanced composite structures and metals business with the operations of Stellex will create a leading manufacturer of titanium aircraft and engine structures.

GKN is already a world leader in advanced composite structures and is successfully taking advantage of the growth in composite content in both civil and military aircraft. There is also a growth trend in the use of titanium, which has complementary material properties and provides enhanced tensile strength with low weight.

Titanium structures will account for approximately 20 percent of the weight of the new F-35 Joint Strike Fighter and 15 percent of the Boeing 787 airliner - more than twice the levels of the aircraft they replace which will drive a doubling in titanium usage within the industry over the next 10 years.

Approximately 65 percent of Stellex revenues are on civil aircraft which increases GKN's exposure to this sector. Stellex has secured strong positions on market leading civil programs such as the Boeing 787 and 777 and in defense has a strong position on the F-35.

Stellex employs approximately 650 people on three U.S. sites in New York, Kansas and California and has current revenues of more than $120 million with a strong future growth profile. GKN is acquiring the business, with reported gross assets of $71 million at December 31, 2005, from the Carlyle Group and management, the terms of which have not been released. The consideration will be satisfied from existing resources.

"The creation of a leading manufacturer of titanium structures is complementary to our established composites strategy," said Marcus Bryson, chief executive of GKN Aerospace. "Stellex is a highly regarded, premium supplier and fits very well with our existing activities in the U.S. Together, we will be one of the aerospace industry's leading independent suppliers of complex, high-performance, titanium structures - well-positioned to capitalize on the significant long-term growth in titanium content on new commercial and military aircraft. Based on current long-term agreements with a range of customers and the growth demand for titanium structures, we expect this acquisition to make a strong contribution to our growth strategy in aerospace."

The acquisition is subject to certain regulatory approvals and completion is expected later this year.