2/2/2011
HEADLINES
Alcoa Fastening Systems Strengthens Presence With McKechnie Acquisition

Alcoa Fastening Systems “significantly strengthens” its aerospace fastener product lines by acquiring Valley-Todeco and Linread, an industry acquisitions expert said.

Alcoa announced this week it will acquire the aerospace fastener manufacturing portion of McKechnie Aerospace Holdings Inc. for $240 million.

TransDigm Group Inc. acquired McKechnie less than two months ago for $1.27 billion.
Richard Hagan of New York-based Pinnacle Capital told GlobalFastenerNews.com that the Valley-Todeco Inc. and Linread Limited divisions of McKechnie “significantly strengthen the AFS product offering with respect to aerospace bolts and nuts for both airframe and engine applications.”

In addition to hot-forged and cold-headed male and female fasteners, Valley-Todeco also manufactures spherical, slotted-entry bearings used in a diverse range of airframe applications, Hagan noted.

“The bearing division of Valley-Todeco is a highly-attractive niche business which expands the AFS product range into new territory,” Hagan pointed out.

The McKechnie fastener operations are comprised of two companies: Valley-Todeco of Sylmar, CA; and Leicester, UK-based Linread. The two companies employ a total of 400 people and manufacture a range of high-strength, specialty-alloy threaded fasteners and spherical, slotted-entry bearings for the aerospace market.

According to filings by TransDigm, the fastener operations of McKechnie generated net sales of $65 million or approximately 22% of total net sales for McKechnie in the 12 months ended Sept. 30, 2010.

When the Alcoa/McKechnie fastener transaction is completed, TransDigm will have recouped 19% of the purchase price paid for McKechnie, while divesting 22% of the trailing annual net sales acquired, Hagan analyzed.

Earnings and cash flow figures for the McKechnie fastener operations were not disclosed.  McKechnie as a whole generated EBITDA of $101.2 million in the 12 months ended Sept. 30, 2010, so TransDigm paid 12.5 times trailing EBITD, Hagan calculated.  “Given the circumstances, it seems very likely that AFS paid a comparable multiple of EBITDA (12.5 times) for the McKechnie fastener operations.”

The acquisition is expected to be completed during the first quarter of 2011, subject to customary regulatory reviews and approvals.

Alcoa Fastening Systems, a business unit of Alcoa, is a worldwide designer and manufacturer of specialty fastening systems, components, and installation tools for aerospace and industrial applications. Headquartered in Torrance, California, Alcoa Fastening has over 5,500 employees and operates 29 locations in 10 countries. ©2011 GlobalFastenerNews.com

Related Stories:

• Dayton Supply & Tool Sold to Motion Industries

• Trifast Reports ‘Steady Progress’ as EU Sales Rise

• Strong Fastener Margin Expansion Boosts B/E Aerospace Profit

Related Links:

• Alcoa Fastening Systems