Boeing To Buy Parts Supplier KLX for $4.25 billion

 - May 1, 2018, 10:02 AM

Boeing moved to expand its burgeoning support division Friday with the decision to acquire major aviation parts supplier KLX in a deal worth $4.25 billion. The all-cash transaction, which includes $1 billion in debt, includes KLX’s Aerospace Solutions Group and remains conditional on KLX’s successful divestment of its Energy Services Group.

For Boeing, the deal represents another effort to effect more control over its supply chain and to more directly participate in what has become a major profit center in its own right. Under the terms of the contract, KLX will become part of Boeing Global Services and integrate with Boeing’s own Aviall parts business. Boeing expects KLX’s position as a leading supplier of chemical composites to significantly broaden Aviall’s business scope.  

“This acquisition is the next step in our services growth strategy, with a clear opportunity to profitably grow our business and better serve our customers in a $2.6 trillion, 10-year services market,” said Boeing Global Services president and CEO Stan Deal. “By combining the talent and product offerings of Aviall and KLX Inc., we will provide a one-stop-shop that will benefit our supply chain and our various customers in a meaningful way.”

The deal calls for the operations and 2,000 employees of KLX’s Aerospace Solutions Group to fully integrate with those of Aviall, providing what Boeing calls a clear path for the business to accelerate growth. Boeing expects KLX’s Miami facilities to remain the principal operating location. Along with its Miami headquarters, KLX Aerospace Solutions Group maintains customer service centers in more than 15 countries. It markets and distributes products for some 2,400 manufacturers and offers approximately 1 million catalog items.

“Our customers have long desired a supplier who could offer essentially 100 percent of their requirements for fasteners, consumables, and expendables,” said KLX chairman and CEO Amin Khoury. “The combination of Aviall and KLX Aerospace facilitates the broadest scope of parts and products to support all customer fleet types for the commercial, military and defense, and business and general aviation markets.”

KLX Aerospace generated revenue of $1.4 billion last year. Boeing expects the acquisition to result in a neutral earnings effect through 2019 and accretion thereafter, as annual cost savings grow to some $70 million by 2021 and further improvements occur over time.

Boeing and KLX expect the sale to close by the third quarter of this year, following the clearance of customary conditions and regulatory hurdles and the approval by a majority of KLX shareholders.