Boeing (BA) suppliers Woodward (WWD) and Hexcel (HXL) said Monday they were scrapping their merger plans as part of their response to the "unprecedented challenges" caused by the coronavirus pandemic.
The companies, which make and supply aircraft parts, in January had agreed to combine in a $6.4 billion deal.
Woodward shares at last check were up 7.9% to $55.29, while Hexcel was off 2.6% to $30.77. Boeing was up 9.5% to $136.29.
Tom Gendron, chairman, president and chief executive of Woodward, and Nick Stanage, Hexcel's chairman, president and CEO, said in a joint statement that "although we are disappointed with this outcome, we are confident this is the right decision for our customers, our shareholders, and our employees."
Woodward, the Fort Collins, Colo., producer of control systems and parts, said it would freeze hiring; cut and furlough staff; freeze wages companywide; cut company officers’ salaries and directors’ base retainers through 2020; and eliminate annual bonus payments.
Woodward also withdrew its full-year 2020 guidance and reduced its quarterly dividend to 8.125 cents a share.
In addition, Woodward said that Gendron, 59, who had said he would retire a year after the merger closed, will continue to serve in his current posts.
Hexcel, the Stamford, Conn., producer of composite materials for aerospace, defense and industrial markets, among other measures implemented a hiring freeze, restricted travel, curtailed capital spending, and is "evaluating employment levels to align with lower customer demand."
Neither company will be required to pay the other a termination fee, the companies said.
Boeing is Hexcel's second-biggest customer, accounting for about 25% of its annual sales. Hexcel also supplies Airbus (EADSY) . Woodward sees roughly 15% of its annual sales from Boeing, which is its biggest customer.
The combined company, which would have been based in Colorado, was expected to create a major aerospace and defense supplier with some 16,000 employees, operations in 14 countries and estimated net revenue of $5.3 billion.
Boeing said manufacturing hubs in the Seattle area will remain closed indefinitely due to the spread of the coronavirus.
The Chicago company said in an email to Washington employees that it was extending the planned two-week shutdown rather than reopening Wednesday.