This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Activist Eases Off B/E Aerospace

NEW YORK (The Deal) -- B/E Aerospace (BEAV) has apparently bought itself some time with its announcement Tuesday that it would split itself into two publicly-traded companies.

Wellington, Fla.-based B/E Aerospace has been under pressure from activist investor Relational Investors LLC, a San Diego-based hedge fund that according to sources had been planning to nominate two candidates to the aerospace manufacturer's board. But a source close to the situation said late Tuesday that Relational is reconsidering whether it will push for board seats following B/E Aerospace's announcement that it would spin off its distribution business to shareholders.

B/E Aerospace on May 4 surprised shareholders by canceling an investor meeting and announcing it was exploring options. The company last week postponed its annual meeting but said Tuesday it intends to set a new meeting date in the next 60 days.

With the new meeting now likely to occur late in the year, the source said that Relational might see value in giving B/E Aerospace time to pursue a spinoff and then nominating candidates at the 2015 meeting, if it sees fit.

A truce could further pressure B/E Aerospace shares, which dropped more than 4.5% on Tuesday after the company said it was splitting instead of selling. B/E Aerospace stressed Tuesday it would continue to explore alternatives, but a pull back by Relational could be viewed as a signal that no deal for B/E Aerospace is likely until the spinoff is completed in 2015.

Canaccord Genuity analyst Ken Herbert on Wednesday lowered B/E Aerospace to a hold on the decreasing prospects for a sale of the entire company.

The decision to split instead of sell was not a surprise, as industry sources said that B/E Aerospace's high valuation coupled with tax considerations made a spinoff more likely than an outright sale or divestiture of the distribution business to a third-party buyer. The spin would allow B/E Aerospace to exit the distribution business in a tax-friendly manner.

Post-split both businesses could be either a buyer or a seller. B/E Aerospace's core business as a maker of aircraft interiors and seating products is well regarded, and the company could be a target for German seating manufacturer Recaro GmbH & Co. KG or combine with similarly-sized and focused Zodiac Aerospace SA of France.

B/E Aerospace has bought two interiors companies in the five weeks since announcing it was exploring options, acquiring Emteq Inc. of New Berlin, Wis., and Germany's F+E Fischer + Entwicklungen GmbH & Co. KG for a combined $470 million.

The distribution arm could be a tougher sell to a strategic buyer, but private equity has shown an interest in logistics assets of late. Distribution is a highly-fragmented business, and an independent company with either a currency of its own or backed by private dollars could find numerous targets available to help build scale.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BEAV $48.63 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs