Hexcel, Woodward announce merger of equals
Woodward (WWD) and Hexcel (HXL) announced a definitive agreement to combine in an all-stock merger of equals “to create a premier integrated systems provider serving the aerospace and industrial sectors,” the companies said.
Under the terms of the agreement approved by the Boards of Directors of both companies, Hexcel shareholders will receive a fixed exchange ratio of 0.625 shares of Woodward common stock for each share of Hexcel common stock, and Woodward shareholders will continue to own the same number of shares of common stock in the combined company as they do immediately prior to the closing.
The exchange ratio is consistent with the 30-day average share prices of both companies.
Upon completion of the merger, existing Woodward shareholders will own approximately 55% and existing Hexcel shareholders will own approximately 45% of the combined company on a fully diluted basis.
In connection with the transaction, Woodward is increasing its quarterly cash dividend to 28c a share.
The merger is expected to be tax free for U.S. federal income tax purposes.
The combined company will be named Woodward Hexcel.
For each company’s respective fiscal year 2019 on a pro forma basis, the combined company is expected to generate net revenues of approximately $5.3B and EBITDA of $1.1B, or a 21% EBITDA margin.
The transaction is subject to the approval of the shareholders of both Woodward and Hexcel, as well as other customary closing conditions, including required regulatory approvals.
The parties expect the merger to close in the third calendar quarter of 2020, subject to satisfaction of these conditions.
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