8-KRegulation FDExhibits & Filings

TransDigm Group INC 8-K Report, Regulation FD Disclosure (Jul 13, 2018)

Filed July 13, 2018For Securities:TDG

Summary

TransDigm Group Incorporated (TDG) announced the completion of its acquisition of Skandia Inc. on July 13, 2018, for approximately $84 million, inclusive of debt assumption. Skandia is a specialized provider of engineered seating foam, fabrication, flammability testing, and acoustic solutions, primarily serving the business jet market, with annual revenues around $26 million and 70 employees. This strategic acquisition is expected to enhance TransDigm's offerings within the business jet sector, a key growth area for the company. Skandia's proprietary and sole-source products, with over half of its revenue from the aftermarket, align well with TransDigm's business model of acquiring and integrating niche, high-margin aerospace component suppliers. The integration of Skandia's established customer base across major business jet platforms like Bombardier, Cessna, Dassault, Embraer, and Gulfstream is a significant positive for TransDigm.

Key Highlights

  • 1TransDigm Group acquired Skandia Inc. for approximately $84 million on July 13, 2018.
  • 2Skandia is a specialized provider of engineered seating foam, fabrication, flammability testing, and acoustic solutions.
  • 3The acquisition is focused on the business jet market, which represents nearly 85% of Skandia's $26 million in annual revenues.
  • 4Skandia's products are largely proprietary and sole-source, with over 50% of revenues from the aftermarket.
  • 5Skandia serves all major business jet platforms, including Bombardier, Cessna, Dassault, Embraer, and Gulfstream.
  • 6The transaction price includes the assumption of debt.
  • 7The acquisition is expected to complement TransDigm's existing product portfolio and market reach.

Frequently Asked Questions

The acquisition of Skandia aligns with TransDigm's strategy of acquiring niche, proprietary, and sole-source businesses with significant aftermarket revenue streams. Skandia's strong position in the business jet market, serving major platforms with specialized seating foam, fabrication, testing, and acoustic solutions, is expected to complement TransDigm's existing portfolio and enhance its market penetration in a key segment.

Skandia reported annual revenues of approximately $26 million. While this is a relatively small addition to TransDigm's overall revenue base, its high percentage of proprietary, sole-source, and aftermarket business makes it strategically attractive for its potential profitability and long-term value.

Skandia specializes in highly engineered seating foam, foam fabrication, flammability testing, and acoustic solutions. Its products are primarily proprietary and sole-source, meaning they are often the only option for certain applications. Skandia's customer base includes all major business jet manufacturers such as Bombardier, Cessna, Dassault, Embraer, and Gulfstream, indicating a strong market position and established relationships.

The total purchase price of approximately $84 million for Skandia includes the assumption of debt by TransDigm. This indicates that the enterprise value of Skandia was $84 million, taking into account both equity and debt components.