Meggitt Buys Cobham Unit in Bid to Double Civil Composite Sales

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Meggitt Plc agreed to pay $200 million in cash for a Cobham Plc composites business that Chief Executive Officer Stephen Young said could double sales of plastic-based components for civil aircraft within five years.

While military sales account for 85 percent of the Cobham unit’s revenue, growth is fastest on the civil side as Airbus Group SE and Boeing Co. crank up airliner output and it provides Wi-Fi-compatible radar domes to existing jet fleets, Young said in a phone interview after the deal was announced Monday.

“Increasingly you’re finding composites getting into the engine as well as getting used more and more in structures,” Young said, adding that the Cobham division also brings “a significant level of single-source content.”

Touted as a potential takeover target by analysts, Bournemouth, England-based Meggitt had said it was also open to purchases as plane-makers press suppliers to offer more complete systems. Cobham, based a few miles from Meggitt in Wimborne, said separately that it’s simplifying its business following the $1.46 billion takeover of Aeroflex Holding Corp. last year.

The composites unit, which has plants in the U.S. and U.K. and annual sales of $81 million, also specializes in engine parts and parts for air-to-air refueling systems. On the defense side the deal boosts Meggitt’s exposure to Lockheed Martin Corp.’s F-35 fighter, the world’s biggest military project.

Meggitt, which most recently purchased United Technologies Corp.’s Precision Engine Controls Corp. for $44.2 million, said the cost of integrating the Cobham arm would be $4.3 million up-front, and $3.8 million from 2017.

Away from the manufacture of aircrafts panels, wings and fuselages, where a small number of big players dominate, there remains plenty of scope for further merger activity within the composites sector, Young said.

“The smaller, more intricate composites, that end of the market, is very fragmented,” he said. “It’s a good growth market and absolutely I think there is room for consolidation.”

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