B/E Aerospace Enters Fastener Business with Acquisition of M&M Aerospace Hardware

John Wolz

B/E Aerospace Inc. announced it has reached an agreement to acquire M&M Aerospace Hardware Inc. for $177 million.\
M&M distributes aerospace fasteners with 70% of its sales in the aftermarket. M&M has a product line of 93,000 items for 3,700 customers worldwide.
B/E manufactures and distributes aircraft cabin interior products and supplies most of the world�s airlines and aircraft manufacturers. B/E has 4,000 employees and annual sales of $700 million and is listed on the Nasdaq.
CEO Robert Khoury said the acquisition permits B/E to leverage existing sales and customer support organizations, doubles B/E�s addressable market, increases its percentage of sales in the aftermarket and becomes a platform for future transactions leveraging M&M�s information systems for inventory management and product pricing.
�In recent months B/E has considered a number of options for accelerating growth and achieving superior financial returns for shareholders,� Khoury said. �We continue to expect our existing markets to provide attractive financial returns. However, achieving more significant growth and the advantages of greater size and scope requires a strategic expansion into a new but closely related market.�
�The aerospace fasteners sector offers an attractive opportunity while remaining close to our existing customers and markets,� he added.
$2.2 Billion Market
B/E estimates global aerospace fastener sales at $2.2 billion and termed the aftermarket �growing and predictable.�
�Aerospace fasteners are consumed during aircraft reconfigurations and passenger-to-freighter conversions and must be replaced at mandated maintenance intervals,� according to a B/E statement. �As the number of aircraft in the worldwide fleet grows, demand for fasteners is expected to grow as well.�
The acquisition nearly doubles the B/E �addressable market,� Khoury said. It also leverages B/E�s sales, customer support and information technology organizations.
Founded in 1974, M&M is based in Miami near B/E�s Wellington, FL, headquarters and several of B/E�s plants.
�We believe M&M provides an excellent strategic fit with our vision for the future and enhances opportunities for organic growth,� Khoury said. �We see several synergies from this acquisition. One of the most significant is the opportunity to expand M&M sales to B/E�s existing aftermarket customer base.�
B/E already has 22 permanent customer support staff on-site at major carriers. �While several of these carriers are currently M&M customers, all are potential customers. By leveraging both our existing sales organization and our customer support staff, we expect to expand M&M�s sales to our customer base, and we believe that we can accomplish that more rapidly than M&M could on its own.�
M&M will have access to B/E�s JIT information technology and e-commerce and can save $15 million per year. M&M�s purchasing, freight and logistics practices can be applied to
B/E�s entire business.
�M&M is well positioned to handle substantial growth in volume with minimal additional capital investment,� Khoury said. �With $30 million recently invested in infrastructure, the company now has new warehouse facilities and newly installed information technology.�
The purchase price consists of $152 million in cash and $25 million in common stock. M&M shareholders can earn up to $23 million more in B/E stock based on M&M performance.
The $177 million price is 6.4 times EBITDA.
Closing of the deal is expected within a month. Web: beaerospace.com
�2001 FastenerNews.com