NEW YORK ( The Deal) -- High-flying aircraft interiors manufacturer B/E Aerospace ( BEAV) late Sunday said it has hired Citigroup and Shearman & Sterling to help it explore options, including a potential sale.
The surprise move, which included canceling B/E's scheduled Monday investor day, caught analysts and investors off-guard. Company chairman and CEO Amin Khoury weeks ago on a quarterly investor call implied B/E was looking to buy and not sell, saying it had signed letters of intent to acquire two manufacturing businesses.
Wellington, Fla.-based B/E, a maker of fasteners, seating and other equipment for commercial and business jets, said it would explore options including a possible sale of the company, a spin-off of select businesses and other moves, but gave few details.
The seemingly quick change in direction raises questions about whether B/E was recently approached by a potential suitor, or perhaps reacting to an activist investor who might want to change aspects of the business. Indeed, a split of B/E might be more likely than an outright takeover.
Deutsche Bank Securities analyst Myles Walton wrote that dealmakers would likely have to be "rather creative" given BE's relatively high valuation compared to its peers. Sterne Agee Group's Peter Arment also suggested a breakup might be in the works, with the company potentially splitting its distribution unit off to a private equity buyer and then finding a strategic buyer for its remaining commercial and business jet properties.
"While a strategic buyer might want all of [BE Aerospace's] assets, we believe most would prefer not to own a distribution company," Arment wrote. The analyst said it is possible BE Aerospace could fetch 11 to 14 times forward Ebitda in a sale, compared to its current price of about 9.9 times 2015 estimates.