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'This acquisition will allow us to offer a more extensive product-line of aerospace fasteners and will enhance our ability to serve our global customers, particularly in Europe,' said Alain Belda, chairman and CEO of Alcoa. 'The temporary downturn in aerospace created an excellent opportunity to expand into an important market for Alcoa, advancing our strategy of focusing on value-added products.'
Fairchild is a supplier of fasteners to the aftermarket for repair and maintenance of aircraft, a segment in which Alcoa has not been a major participant.
Fairchild Fasteners reported revenues of $571 million and EBITDA of $77 million for the 12 months ending Mar. 31, 2002. After adjustments for two small businesses in the segment that Alcoa is not purchasing, EBITDA during that same period was $80 million.
The new AFS business will have combined revenues of approximately $1 billion. Of that amount, 60% represents sales to the aerospace customers, 23% to commercial transportation, and 17% to automotive industries. Both Fairchild and Huck have unique proprietary products that are used in these applications.
It is estimated that the acquisition can yield $50 million before taxes in synergies over three years through increased use of shared services and deployment of the Alcoa Business System. In addition, $70 million of reductions in working capital is planned through improved productivity. Alcoa said the acquisition will be accretive to earnings by the end of the first full year despite current weakness in the aerospace markets. For reporting purposes, the results from these operations will be included in Alcoa's Engineered Products segment.
Fairchild Fasteners' major customers include Airbus, Boeing, General Electric, Honeywell, Lockheed Martin, Northrop Grumman, UTC, Wesco, Pentacon, and the U.S. government. The company has 4600 employees and operates 15 primary manufacturing facilities in the U.S., Europe, and Australia.