Jet Products is hottest buy on Senior acquisition trail

Senior Engineering made its biggest-ever acquisition last week, buying a high-tech aerospace components company in the US for $33.7m (£20.1m). Jet Products makes a range of hot engine parts and structural components used in ducting, and supplies both Airbus and Boeing. The bulk of the $33.7m purchase price is in cash, but Jet’s largest shareholder, […]

Senior Engineering made its biggest-ever acquisition last week, buying a high-tech aerospace components company in the US for $33.7m (£20.1m).

Jet Products makes a range of hot engine parts and structural components used in ducting, and supplies both Airbus and Boeing.

The bulk of the $33.7m purchase price is in cash, but Jet’s largest shareholder, Ronald Blair, who owns 40% of the company, will receive 2.5 million Senior shares.

Senior’s corporate development director Glenn Timms said the acquisition was a strategically important move that would give the company a number of sales development opportunities in Europe and added significantly to the group’s critical mass in the aerospace sector.

‘This is much more than just an add-on,’ he said. ‘Our strategy has been to add to our activities so we can give customers a rounded range of aerospace components and technologies.’

The acquisition of Jet Products is Senior’s ninth deal this year and easily the biggest.

Timms said other acquisitions would follow, but they were likely to be on a more modest scale.

Timms said: ‘The sale came about because the senior management (at Jet) wanted an exit route. As the civil aviation cycle turns down there could be further opportunities to acquire small to medium-sized component suppliers.’

Gearing will rise to about 70% following the acquisition of Jet and is not expected to go much higher, Timms said.

He said equity deals in future were a possibility: ‘We’re still very comfortable with this level of debt. Interest cover is 8.5 times and there is still some headroom left to make further bolt-on acquisitions as they arise.’

The Jet Products acquisition is expected to be earnings enhancing in the first year. Last year it reported pre-tax profits of $5m on sales of $27.2m.

Jet will be integrated into Senior’s Flexonics operation, which now accounts for 70% of group turnover and 90% of profits.

The engineering products and services division, which accounts for the balance of Senior’s business, is subject to an ongoing review.

Timms said that while the division had improved markedly there would be another review at the start of next year.