Textron Remains Silent on Anticipated Beechcraft Acquisition

AINalerts » December 24, 2013
December 24, 2013, 8:45 AM

Friday’s market chatter that Textron is set to acquire Beechcraft had still drawn no official comment from either party as of press time.

A December 20 report in the Financial Times citing only “people familiar with the matter” was enough to drive Textron’s share price up on Wall Street by almost 15 percent at one point to close at $37.29 by the end of the day. It subsequently fell slightly on Monday, but some close industry observers speaking to AIN on condition of anonymity remained convinced that a deal to bring together Textron subsidiary Cessna and Beechcraft could be announced before year-end.

A leading figure in the charter sector with connections to both OEMs said that the deal is likely imminent and commented that it would represent a “once-in-a-generation” opportunity to make both companies more competitive.

Industry analyst Brian Foley told AIN that the resulting merger would make good sense. “It’s a good fit for Textron,” he said. “Cessna already has the jet side of the market well covered. The King Air line is a twin turboprop that Cessna currently doesn’t have in its line, and it’s a real cash cow for Beechcraft. It fits nicely between the single-engine turboprop Caravan and the light jets.”

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Tim Kern
on January 23, 2014 - 11:11am

Really? "Brian Foley told AIN that the resulting merger would make good sense. 'It’s a good fit for Textron,' he said. 'Cessna already has the jet side of the market well covered. The King Air line is a twin turboprop that Cessna currently doesn’t have in its line, and it’s a real cash cow for Beechcraft. It fits nicely between the single-engine turboprop Caravan and the light jets.'”

Does Mr. Foley really think that the logical progression of ownership would, or could go from a Caravan to a Mustang or CJ, via a King Air? What kind of customer is he talking about? The step from King Air to twinjet is logical, provided the load capacity isn't too restricted by the move to the jet, so the Mustang's out.

But the move from Caravan to King Air -- this is puzzling. What do they have in common, other than Jet-A and a PT6 base? Few budget-constrained freight or bush or unimproved-runway clients (the Caravan's constituency) would see additional utility in a King Air.

It's like changing one's ground fleet of Ford E-250 vans to the Porsche Panamera, saying it's a good idea because the Porsche is the gateway to a Lotus (Mustang) or Ferrari (CJ).

Let's not avoid the obvious: the Beech properties are all that's left of value for Olive's old company to sell, and Cessna knows a bargain when it sees one.

 

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