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By Julie Johnsson
By Julie Johnsson
CHICAGO – Textron Inc., the manufacturer of Cessna aircraft, will boost its lineup of propeller-driven aircraft after reaching a deal to buy Beechcraft Corp. for $1.4 billion, as it seeks to counter a slump in business-jet sales.
The Providence-based company will purchase all outstanding equity interests in Beech Holdings LLC, the parent of Beechcraft, it said in a statement on Thursday. The deal, which includes the repayment of Beechcraft’s working capital debt, will be financed by a combination of available cash and as much as $1.1 billion in new debt.
Adding Beechcraft models such as the twin-engine King Air will complement a Cessna lineup that ranges from two-seaters to the Caravan turboprop used to fly people and cargo to small airports. That market segment is less competitive than private jets, where Cessna has struggled because it doesn’t build the large, long-range planes now favored by corporate buyers.
“Terrific product fit,” Cai von Rumohr, a Cowen & Co. analyst in Boston who rates Textron as outperform, said in a Dec. 23 note to clients. “Cessna and Beechcraft have complementary product lines, with Cessna focused on bizjets and Beech on turboprops, pistons.”
Beechcraft had revived an auction process a year after its deal to sell itself to a Chinese jetmaker collapsed. It had drawn takeover interest from at least three suitors, including Brazil’s Embraer SA, India’s Mahindra & Mahindra Ltd. and Textron, Bloomberg News reported in October, citing people familiar with the matter.
The Financial Times reported Dec. 20 that Textron was close to a deal for Beechcraft. Squeezed by waning private-jet demand and a drop in U.S. arms spending, the former Hawker Beechcraft filed for bankruptcy in May 2012. The Wichita, Kan.-based company left court protection in February 2013 and exited the jet business.
Investors holding enough equity in Beech Holdings to approve the transaction have delivered proxies authorizing written consents in favor of the deal, Textron said. The transaction was unanimously approved by Beechcraft’s board and the purchase is expected to close during the first half of next year, subject to customary closing conditions, including regulatory approvals, according to a statement by Beechcraft.