Textron, an industrial conglomerate that includes big-name aerospace companies such as Bell Helicopter and Cessna Aircraft
, has also recently agreed to acquire Beechcraft as of December 26, 2013, in a deal valued at $1.4 billion. This sale, which was concluded in the beginning of 2014, also includes the discontinued Hawker jet product line. Textron has quieted critics that proclaimed the company the already too far in debt to acquire the Beechcraft business, which had over $3 billion in debt alone. This would bring Textron’s debt load past $4.4 billion, in addition to the $1.1 billion in loans that would be required to finance the sale.Although this does seem like bad news for shareholders, the acquisition is already looking like it will pay dividends in the long run. Beechcraft was just awarded a $127 million contract to the New Zealand Ministry of Defence in which it will supply 11 T-6C turboprop trainer aircraft as well as ground simulators, with delivery scheduled for 2016.
The new planes will not only replace the leased Beechcraft King Air B200s, they also win out over the domestically-made CT-4E trainer jets that are currently used by the New Zealand Air Force. This signifies a big step for Beechcraft as it has secured its position in the New Zealand market and is on track to increase revenues, meaning a big win for its parent company Textron as well. Although, $127 million only represents 1% of Textron’s annual revenue, which may not sound like much, everything counts. This is due to the fact that the US is making drastic cuts in defense spending and defense contractors at home are already feeling the pinch. Every contract won abroad would greatly help offset the effect of budget cuts at home. With Beechcraft in prime market position for the next few years and with several more in the works, Textron is aiming for a nice return on its investment. Textron, founded in 1923, is a publicly-traded S&P 500 Component company that generates over $3.5 billion in annual revenue and $242 million in annual net income. It currently employs approximately 33,000 people globally. Divisions of subsidiaries of Textron include the following: Bell Helicopter, Cessna, E-Z-Go, Grenlee, Jacobsen, Kautex Textron, Textron Airland, Textron Aviation, and Textron Systems
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