Stanley Black & Decker (SWK) - Get Report said Wednesday it agreed to buy Boeing (BA) - Get Report supplier Consolidated Aerospace Manufacturing for $1.5 billion, provided Boeing gets the troubled 737 MAX jet back into the air and meets certain production goals.
Shares of Stanley Black & Decker were down 2.9% to $161.56, while Boeing was up 2.3% to $323.94, rallying after posting a massive fourth-quarter loss.
CAM makes specialty fasteners and other parts for the aerospace and defense markets and generated revenue of $375 million in the last 12 months.
Stanley Black & Decker said the acquisition could add between 30 cents and 40 cents a share of earnings by its third year.
Stanley Black & Decker said $200 million of the purchase price for CAM will be held back and is contingent on the Federal Aviation Administration allowing the MAX to return to service and Boeing achieving certain production levels.
The 737 MAX was grounded last year after two fatal crashes killed hundreds of people. Last month Boeing ousted its CEO over his handling of the crisis and suspended production of the plane.
Reuters reported last week that Federal Aviation Administrator Steve Dickson told senior U.S. airline officials that the FAA could approve the troubled Boeing 737 MAX's return to service before mid-year, sooner than the planemaker's latest guidance.
On Wednesday, Boeing posted its first annual lost since 1997 as the billions in costs linked to the ongoing delay of the ground 737 MAX hammered the aerospace giant’s top and bottom lines.
Boeing said MAX-related delay and grounding costs increased by $2.6 billion over the quarter.
Separately, Black & Decker reported fourth-quarter net income of $199.1 million, or $1.32 a share, compared with a year-earlier loss of $106 million, or 72 cents. Adjusted per-share earnings came to $2.18, matching Wall Street’s consensus. Sales rose to $3.714 billion from $3.635 billion, missing analysts’ calls for $3.782 billion.