The Deal: Rockwell Collins Buys Arinc For $1.4B

NEW YORK ( TheStreet) -- Rockwell Collins ( ROC) said it would acquire private equity-owned Arinc in a $1.39 billion deal that would expand the aerospace component manufacturer's reach beyond the cockpit.

Cedar Rapids, Iowa-based Rockwell will acquire the business from Carlyle Group ( CG), which itself bought Arinc from a consortium of airlines in 2007 for about $650 million. The Annapolis, Md.-based Arinc provides communications and information process for pilots, controllers, and others in the transportation business, and is expected to generate sales of more than $600 million this year.

Shares of Rockwell Collins were sliding on back of the news, down 3.43% to $71.87 in early Monday trading.

The deal is the first for new Rockwell Collins CEO Kelly Ortberg, who took over for Clay Jones on August 1. Ortberg in a statement said that the purchase would shift Rockwell Collins' business to about 54% commercial, from about 52% government, and expand the maker of cockpit tools into new areas.

Ortberg called the purchase "a natural fit for Rockwell Collins," saying the deal "accelerates our strategy to develop comprehensive information management solutions by building on our existing information-enabled products and systems and Arinc's ground-based networks and services to further expand our opportunities beyond the aircraft."

Aerospace firms have been seeking to expand their exposure to commercial aerospace, where a wave of restructurings has left airlines in expansion-mode and looking to spend on new planes and new equipment, and away from defense and sequester uncertainty. Rockwell in addition to making cockpit and cabin equipment for the commercial and business jet segments makes communications, electronics and navigation systems for government customers.

Arinc last October sold its defense systems engineering and support division to Booz Allen Hamilton ( BAH) for $154 million.

Carlyle put the rest of the company on the block in February. Arinc Chairman and CEO John Belcher said, "Rockwell Collins' expertise in managing information on-board the aircraft, coupled with our innovative and reliable air to ground communications services, will be instrumental in providing new integrated information management solutions for our customers."

JPMorgan Chase and an Evercore Partners team of Les Fabuss, Brendan Panda, Katherine Rossolimo, Justin Hirsch and Anisha Atluri advised Arinc and Carlyle. Citigroup advised Rockwell Collins on the deal.

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