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The Deal: Metalmark Makes $250M Deal to Sell Airborne Systems

Stocks in this article: TDG

NEW YORK (The Deal) -- Private equity firm Metalmark Capital is exiting portfolio company Airborne Systems Inc. in a sale to strategic player TransDigm Group (TDG) for $250 million, the buyer announced Monday, Dec. 2.

Pennsauken, N.J.-based Airborne is a designer and manufacturer of personnel parachutes, cargo aerial delivery systems, emergency escape systems, naval decoys and other related products.

The company's annual revenue is about $160 million.

Metalmark portfolio company HDT International Holdings acquired Airborne in January 2010 for an undisclosed amount.

HDT has been a Metalmark portfolio company since 2007 when it was acquired from Behrman Capital for $335 million.

Cleveland-based TransDigm is a designer, producer and supplier of highly engineered aircraft components for commercial and military aircraft.

On the day it announced it was acquiring Airborne, TransDigm's shares were down 1.4% at $154.38.

TransDigm chairman and CEO W. Nicholas Howley said in a statement that Airborne's large number of international customers provides a buffer to the current uncertainties of the U.S. defense spending environment.

About 45% of Airborne's revenue comes from domestic customers and 55% from international customers.

U.S. defense spending is expected to decrease to about $527.6 billion for fiscal 2014, down from $622 billion in fiscal 2013 and $652.3 billion the year before that, according to U.S. Department of Defense budget requests.

For 2014, the DOD said, it has identified about $34 billion in savings from consolidating infrastructure and closing bases, terminating or restructuring weapons programs, stabilizing medical costs and restructuring military construction plans.

While announcements for defense targets remain weak, there has still been M&A activity in the aerospace and defense sector. As of the end of the third quarter, there were 184 deals in the sector globally valued at $9.3 billion, with 53 of them worth $3.1 billion taking place within the third quarter. For full year 2012, there were 296 deals valued at $21.9 billion, according to PricewaterhouseCoopers LLP's November industry report.

The largest deal of the third quarter was Cedar Rapids, Iowa-based Rockwell Collins Inc.'s acquisition of Arinc Inc. from Washington private equity firm Carlyle Group for $1.4 billion. Carlyle had acquired the aerospace communications company from a consortium of airlines in 2007 for about $650 million.

Another large deal was MidOcean Partners LP's sale of rifle maker Bushnell Group Holdings Inc. to Alliant Techsystems Inc. for $985 million.

MidOcean originally purchased Bushnell in 2007 from Wind Point Partners for $500 million.

Neither Metalmark nor TransDigm were available for comment.

Moelis & Co. was Metalmark's financial adviser.

Written by Taina Rosa

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