FY17RCNR03-002-RockwellCollins-BEAerospace.jpg Rockwell Collins

Rockwell M&A Activity Muted in Short-Term

Rockwell Collins could see further acquisitions on the horizon, but any such deals in the next few years would be much smaller than its recent $8.6 billion takeover of interiors specialist B/E Aerospace.

The supplier made a commitment to ratings agencies that it would service a portion of the debt it took on in that deal, Rockwell Collins CEO Kelly Ortberg said. Therefore, the company does not expect any big acquisitions in the near-term.

“So, we’ll be out of the major [mergers and acquisitions] market for probably a couple years as we’re servicing our debt,” Ortberg told Aviation Daily during a press briefing at one of the company’s newly-acquired facilities in Winston-Salem. The facility is one of three legacy B/E Aerospace sites here, which focus on interiors work such as seat manufacturing and refurbishment.

Rockwell Collins closed the B/E Aerospace deal on April 13, and first announced its intent to acquire the company in Oct. 2016. At that time, it said the deal consisted of about $6.4 billion in cash and stock, plus a net debt assumption of $1.9 billion.

Rockwell Collins is not completely ruling out acquisitions in the next few years, but potential deals likely would not exceed $50 million. The supplier could take smaller “bolt-on” companies to build its portfolio, Ortberg said. A recent example is its Jan. acquisition of Pulse.Aero, a U.K.-based company that supplies technology for self-checking baggage at the airport.

“I feel good about our portfolio--I don’t think we have gaps that are going to keep us from being successful,” Ortberg said. “Having said that, I think we do have opportunities to add a few things here and there that we currently don’t do.”

In particular, the company could seize opportunities that involve “harmonizing” interiors and avionics. In addition, Ortberg said he is continuing to look at the “improving” defense market, and ways to build that part of the business.

“But don’t expect anything big from us for a couple years,” he reiterated, referring to potential acquisitions in the near-term.

Rockwell Collins already bolstered its communications capabilities when acquiring ARINC in Dec. 2013, and now the B/E Aerospace piece opens up possibilities for further expanding connectivity past the cockpit. By acquiring B/E, Rockwell Collins has gained new interiors platforms such as aircraft seating, galley inserts and lighting.

Ortberg said the company envisions outfitting interior components with sensors that can give cabin crew more information about passengers, or the maintenance status of a component. For example, a seat sensor could send a signal to cabin crew when it adjusts position on a long-haul flight, therefore indicating that the passenger is awake and needs a hot towel. Alternatively, components like galley inserts could have sensors that indicate how much longer they can stay onboard before needing maintenance.

The industry also is now focusing more on the travel experience as a whole, including airport check-in and lounges, Werner Lieberherr, COO of Rockwell Collins’ Interior Systems said. He formerly served as the CEO of B/E Aerospace.

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