ST Engineering to buy MRA Systems from General Electric for US$630 million

U.S. one-dollar currency notes; taken September 2018.U.S. one dollar bills.

ST Engineering said on Thursday that its wholly owned U.S. subsidiary Vision Technologies Aerospace entered a deal to acquire all of MRA Systems from General Electric for US$630 million, or around S$868 million.

Baltimore, Maryland-based MRA Systems, or MRAS, which has around 800 employees, is an original equipment manufacturer (OEM) of engine nacelle systems for both narrow-body and wide-body aircraft, ST Engineering said in the filing to SGX after the market close on Thursday.

An engine nacelle is the casing that houses an aircraft engine, which provides aerodynamics during flight and thrust reversal capabilities, it said.

MRAS has two main business lines: design development, production and sale of nacelles, thrust reversers and aerostructures, as well as spare parts sales, the filing said.

“ST Engineering has been looking to invest in new growth areas, including businesses that offer competitive products through the ownership of intellectual properties and are synergistic to its core businesses,” it said.

“MRAS is a strong fit given its expertise and proprietary designs to manufacture nacelles using advanced composites. The proposed acquisition will allow ST Engineering to scale up its aerospace capabilities by moving the company into the OEM business of high-value
nacelle components and replacement parts,” it added.

The US$630 million price tag is the base purchase price on a cash-free and debt-free basis, subject to adjustments for underfunded pension obligations, other debt-like items, transaction expenses, net working capital and other adjustments, it said.

The net consideration to be paid in cash at closing is estimated at US$440 million, or around S$606 million, which will be funded through internal cash and external borrowings, it said.

ST Engineering said the deal is expected to be earnings accretive for the group and for its aerospace sector, pointing to an expected production ramp-up at MRAS.

For the first half ended 30 June, MRAS posted net profit before income tax, minority interests and extraordinary items of US$24.1 million, or around S$33.2 million, ST Engineering said.

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