Senior Seeks $150 Million Bolt-Ons to Tap Airbus, Boeing
Senior Plc (SNR), a U.K. producer of parts for the Airbus SAS A320 and Boeing Co. (BA) 787, said it’s seeking bolt-on takeovers after earlier deals helped boost annual profit 17 percent, spurring the stock’s biggest gain in 18 months.
Rickmansworth, England-based Senior, which also makes auto and industrial components, could spend 100 million pounds ($150 million) per transaction, aided by a 22 million-pound drop in net debt, Chief Executive Officer Mark Rollins said today.
“We have plenty of headroom for acquisitions,” Rollins said in a telephone interview. “Deals are more likely to be in aerospace. We saw strong growth at Boeing and Airbus and commercial aircraft sales will continue to be strong.”
Senior’s adjusted pretax profit rose to 91.1 million pounds in 2012 as it tapped record production rates at Airbus and Boeing, aided by the 54 million-pound purchase of U.K. wing and seat structures producer Weston in 2011. Recent deals included the acquisition of Wisconsin-based GAMFG Precision for $45 million and Britain’s Atlas Composites for 2.5 million pounds.
Senior surged as much as 8 percent, the biggest gain since Aug. 25, 2011, before trading 6.2 percent higher at 234.90 pence as of 9:29 a.m. in London. The shares have gained 17 percent this year, valuing the business at 970 million pounds.
Aerospace sales will be driven by commercial activities, including Airbus’s revamped A320neo, on which Senior will have 50 percent more work through a contract to provide parts to Pratt & Whitney, one of two engine suppliers, Rollins said.
The CEO said that while Boeing, responsible for 16 percent of Senior’s aerospace sales, has frozen deliveries of the 787 while it examines battery faults, the U.S. planemaker still aims to double production to 10 aircraft a month by early 2014.
Engineering costs, due to peak in the first half, will be a slight drag on earnings, Rollins said. In addition to the neo, Senior is involved in developing the Airbus A350 wide-body and single-aisle Bombardier Inc. (BBD/B) CSeries, both due to fly this year.
The performance of Senior’s military business is likely to weaken as production of Lockheed Martin Corp. (LMT)’s C-130J transport plane and the Sikorsky UH-60 Black Hawk helicopter slows, Rollins said. Those reductions are factored into the 2013 forecast, which predicts “further progress” this year.
Senior last year sold its Hargreaves construction business and plans no further divestments, Rollins said.
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