Singapore Technologies Engineering Ltd said that the Group’s US subsidiary, Vision Technologies Aerospace Incorporated (VT Aerospace), has entered into a conditional share purchase agreement to acquire a 100 per cent ownership in the aircraft part manufacturer MRA Systems, from General Electric Company.
The aggregate purchase consideration for the Proposed Acquisition is US$630m (approximately S$868m) on a cash-free and debt-free basis, subject to closing adjustments for underfunded pension obligations, other debt-like items, transaction expenses, net working capital and other contingent adjustments.
The Singapore-based company, which conducts maintenance and repair operations for airlines, said the deal would allow it to move upstream into the manufacturing and spare parts business for engine nacelles, the casing that houses an aircraft engine.
“ST Engineering keeps a constant lookout to acquire companies in our core business areas or adjacencies that will contribute profitable revenue streams and sharpen our competitive edge. We are excited by the prospects of our investment in MRAS, which is a high-value and complementary business that will enhance our scale, global reach and capture synergies for the Group,” said Vincent Chong, President & CEO of ST Engineering.
MRAS is an established Original Equipment Manufacturer (OEM) of engine nacelle systems for both narrow-body and wide-body aircraft. Based in Baltimore, Maryland, USA, MRAS has two principal business lines – design, development, production and sale of nacelles, thrust reversers and aerostructures, and spare parts sales.
MRAS is the sole supplier of nacelles for Airbus SE A320neos using LEAP-1A engines manufactured by CFM International, a GE and Safran SA joint venture.
“My congratulations to Vincent and the ST Engineering team for their proposed acquisition of our Middle River Aircraft Systems (MRAS) business. I am confident that ST Engineering is the right choice for the future. They are an outstanding partner with a dedication to engineering and operations excellence. We look forward to our continued work with the Group and the Middle River team as an important supplier of nacelles on our propulsion systems for many years to come,” added David Joyce, Vice Chairman of GE and President and CEO of GE Aircraft Engines.
The deal comes at a time when industrial conglomerate GE is slimming down its business to focus on jet engines, power plants and renewable energy.
ST Engineering has been looking to invest in new growth areas, including businesses that offer competitive products through the ownership of intellectual properties and that are synergistic to its core businesses. MRAS is a strong fit, given its expertise and proprietary designs to manufacture nacelles using advanced composites.
The Proposed Acquisition will allow ST Engineering to scale up its aerospace capabilities by moving the company into the OEM business of high-value nacelle components and replacement parts. MRAS’ design, engineering and manufacturing know-how in advanced composite structures is synergistic with ST Engineering’s composite manufacturing capabilities.
“Moving upstream into the business of design and manufacturing of nacelles will allow us to benefit directly from the robust growth of the global aircraft fleet as an OEM, and enable us to serve our customers better through an enhanced suite of products and services. MRAS fits into this strategic intent given its strong portfolio of intellectual properties and programmes supporting high-growth aircraft platform such as the A320neo,” said Lim Serh Ghee, President of ST Engineering’s Aerospace sector.