Woodward, Hexcel to merge to serve aerospace sector
January 15, 2020 - United States Of America
Woodward and Hexcel Corporation are merging to create a premier integrated systems provider - Woodward Hexcel – to serve the aerospace and industrial sectors. The combined company will focus on technology-rich innovations to deliver smarter, cleaner, and safer customer solutions. Woodward Hexcel will be headquartered in Fort Collins, Colorado.
Woodward and Hexcel Corporation have signed a definitive agreement to combine in an all-stock merger of equals. The combined company will be led by a highly experienced and proven leadership team that reflects the strengths and capabilities of both organisations. In addition, and to ensure a seamless integration, Woodward and Hexcel will establish a dedicated integration planning team, led by Bob Weber, vice chairman of Woodward, and Rob Hennemuth, executive vice president of Human Resources and Communications at Hexcel.
Under the terms of the agreement approved by the boards of directors of both companies, Hexcel shareholders will receive a fixed exchange ratio of 0.625 shares of Woodward common stock for each share of Hexcel common stock, and Woodward shareholders will continue to own the same number of shares of common stock in the combined company as they do immediately prior to the closing. The exchange ratio is consistent with the 30-day average share prices of both companies.
Upon completion of the merger, existing Woodward shareholders will own approximately 55 per cent and existing Hexcel shareholders will own approximately 45 per cent of the combined company on a fully diluted basis.
Woodward Hexcel will be among the top independent aerospace and defence suppliers globally by revenue. It will have more than 16,000 employees, manufacturing operations in 14 countries on five continents, and a diversified customer base across multiple markets.
Nick Stanage, chairman, chief executive officer and president of Hexcel, will serve as chief executive officer of the combined company. Tom Gendron, chairman, chief executive officer and president of Woodward, will serve as executive chairman of the combined company until the first anniversary of the closing of the merger, at which time Gendron intends to retire from the company and will then serve as non-executive chairman of the combined company until the second anniversary of the merger close. At that point, Stanage will assume the role of chairman of the board in addition to his CEO responsibilities.
The combined company’s board of directors will have 10 members, consisting of five directors from each company, including Gendron and Stanage.
Gendron said, “Our two companies are each independently working toward addressing the sustainability and efficiency needs of our customers. This merger accelerates our technology investments and creates greater benefits and growth opportunities than either company could have achieved alone. Both Woodward and Hexcel have attractive growth trajectories, with strong aftermarket positions and increased composite penetration driving our respective outlooks. Our complementary cultures and shared commitment to operational excellence and customer satisfaction, together with our enhanced financial strength, will position us to better serve our OEM and aftermarket customers. We will be stronger together and are committed to delivering even greater value to all our stakeholders.”
Stanage said, “The future of flight and energy efficiency will be defined by next-generation platforms delivering lower cost of ownership, reduced emissions, and enhanced safety – and a combined Hexcel and Woodward will be at the forefront of this evolution. Woodward’s innovative control systems and Hexcel’s advanced lightweight materials are designed to drive improved reliability, efficiency, and emissions. Through our combined scale and strong cash flow profile, we will be even better positioned to accelerate innovation in aerodynamics and propulsion efficiencies and support evolving customer needs. I am incredibly excited about what we can accomplish by uniting these two premier companies and world-class teams with similar values, cultures, and operating philosophies.”
The merger creates a leading company well positioned to deliver forward-looking technologies to address evolving customer needs. The transaction unites industry leaders in advanced materials and control systems to create a premier aerospace and industrial leader well positioned to satisfy customer demands for aircraft aerodynamics, energy efficiency, improved safety, and reduced emissions and noise. The combined company expects to spend approximately $250 million on research and development in the first full year post-closing and will have greater resources to invest in emerging technologies to support next-generation aerospace customer programmes and accelerate innovation in aerodynamics, propulsion, and energy efficiency.