Avcorp Industries has announced its agreed to acquire the composite aerostructures division of SGL Carbon’s US-based subsidiary Hitco Carbon Composites.
Hitco Carbon Composites produces composite parts for commercial and military aerostructures and the acquisition by Avcorp includes all inventories, equipment, tooling and other fixed assets, intellectual property, contractual rights, good will, accounts receivable, and work in progress. The Corporation is not acquiring any assets of Hitco’s materials division. Avcorp will be continuing operations at Hitco’s current aerostructures facilities in Gardena, California.
The addition of the Hitco composites division is anticipated to approximately double Avcorp’s revenues. Avcorp will receive approximately $42 million in cash and payment commitments. SGL will also provide further in kind supplies or payments of up to $5 million over the period to December 31, 2016. The purchase consideration is subject to customary adjustments based on working capital of Hitco and certain contract pricing adjustments being negotiated by Hitco.
Peter George, Avcorp Group CEO commented that;
The acquisition of Hitco’s composites division offers a unique opportunity to transform our business by broadening our product range and strengthening our composite capabilities. We also anticipate significant operational efficiencies and better utilisation of our existing assets. Combining the businesses should accelerate Avcorp’s return to profitability. We see many opportunities to enhance the Hitco composites business and provide superior products to Hitco’s exceptional aerospace customers.
Closing is subject to customary conditions, including finalisation of other ancillary agreements, third-party and regulatory approvals, and is anticipated to occur in Q3 2015.