Jason Sandefur

In 2006 Aviall Inc. signed an agreement to be acquired by The Boeing Co. for $1.7 billion cash plus the assumption of about $350 million in debt. Valued at $48 per share, the price represents a 27% premium for fastener distributor Aviall”s stock value of $37.70 per share the day before the announcement.
“Boeing is paying an extremely high price for Aviall,” fastener acquisition specialist Richard Hagan of NY-based Pinnacle Capital Corp. commented.
In 2005 Aviall generated net sales of $1.295 billion, gross profit of $228.5 million, EBITDA of $129.3 million and EBIT of $106 million. The company had $358.5 million of debt, making the transaction value approximately $2.07 billion.
“This means Boeing is paying 16 times trailing EBITDA (operating cash flow), 19.5 times trailing EBIT and 1.6 times trailing net sales,” Hagan pointed out. The recent high range price for large publicly held companies is 7 to 9 times EDITDA.
“This deal just confirms what industry participants already understand – these are very heady days for the aerospace industry and all signs indicate that this party is likely to last for quite some time,” Hagan explained.
Aviall will keep its name and will operate as a wholly owned subsidiary of Boeing”s Commercial Aviation Services. Aviall”s 2005 revenue grew 30% to $1.3 billion, with more than 25% growth expected in 2006.
“We will now be able to bring our groundbreaking efforts to a much wider aerospace supply chain and thereby expand the number of suppliers whose products can benefit from our high level of customer service and supplier standards resulting in having more of the right parts in the right place at the right time,” stated Aviall CEO Paul Fulchino.
In addition to its distribution business, Aviall owns Inventory Locater Services, which operates electronic marketplaces for buying and selling parts, equipment and services for the global aviation, defense and marine industries. With more than 16,500 users in 90 countries, ILS” electronic marketplaces contain more than 58 million line items representing over five billion parts for sale. ILS also maintains databases of over 150 million cross-referenced U.S. government records.
The deal, Boeing”s largest acquisition since the $27 billion purchase of McDonnell Douglas Corp. in the late 1990s, is expected to close during the third quarter of 2006.
Boeing reported overall revenue of $54.8 billion in 2005, including roughly $9 billion from spare parts and services.
Aviall is an independent global distributor of aviation parts and inventory management services to 19,000 customers, including 300 airlines. Aviall sells more than 90,000 products from 220 OEMs. The company operates 53 facilities around the world.
Fulchino, a former Raytheon engineer, has piloted the company since January 2000. He served as COO of B/E Aerospace from 1996 to 1999.

Headquarters: 2750 Regent Blvd., DFW Airport, Dallas, TX 75261-9048. Tel: 972 586-1000 Fax 972 586-1361
Web: aviall.com
NYSE Symbol: AVL
CEO: Paul Fulchino, 59
Investor Relations: Colin Cohen, 54
Founded: 1981
Employees: 1009 \ �2006 FastenerNews.com