Analysts speculate about sale of Hawker Beechcraft

12/20/2012 10:47 AM

08/08/2014 10:13 AM

Despite plans to emerge from bankruptcy as a smaller, stand-alone company, an acquisition of Hawker Beechcraft could still be possible, some analysts say.

Textron, Cessna Aircraft’s parent company, and Embraer have acknowledged interest in the company, Joseph Nadal, an aerospace and defense analyst with J.P. Morgan, noted in a December report called “Balance of Power.”

“We also think GD (General Dynamics) could be a dark horse bidder,” Nadal wrote. “GD is interested in pursuing acquisitions, the fit would be good, and a transaction with Beechcraft would advance its efforts to shift its sales mix further toward commercial businesses.”

The company would fit well with Textron and Embraer, Nadal said.

Textron could generate material cost savings by trimming overlap with Cessna. And Embraer would benefit from an enlarged U.S. footprint, he wrote.

Hawker Beechcraft filed for Chapter 11 bankruptcy protection May 3.

In October, a deal to sell the company to Superior Aviation Beijing for $1.8 billion collapsed. After the collapse, the company announced plans to emerge from bankruptcy early next year as a smaller, stand-alone entity focusing on its King Air and Beechcraft products and its military and aftermarket business. The plans include exiting the corporate jet business.

“I think anything is still possible,” Teal Group analyst Richard Aboulafia said about the potential of a sale.

Aboulafia agrees with Nadal on the list of potential candidates.

A buyer could purchase the company before the bankruptcy is completed, especially if it had dreams of resurrecting the jet program, Aboulafia said.

But it’s unlikely that any of the three companies most often mentioned as potential buyers would be interested in resurrecting it, he said.

Should the company ultimately be acquired, a sale could wait until after it emerges from bankruptcy, Aboulafia said.

Hawker Beechcraft’s bankruptcy filing predicted the restructured company would generate $2.4 billion of sales in 2014, something Nadol describes as “optimistic assumptions” at first blush.

Aboulafia agrees.

If a buyer would acquire the company now, it would pay a “high premium,” he said.

An acquisition could wait until later “for reality to intrude upon those lofty figures,” Aboulafia said.

Another industry observer who requested anonymity, said that if an acquisition took place, it would more likely take place after the company emerged from bankruptcy.

“There is no sense of urgency” to do it quickly, he said.

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