Boeing (BA) announced early Monday that it will buy Spirit AeroSystems (SPR) in an all-stock deal that values the fuselage maker at approximately $4.7 billion, or $37.25 per SPR share.
The purchase price represents a roughly 13.3% premium to Spirit stock's June 28 close at $32.87, sending its share price up by more than 3% Monday. BA stock, meanwhile, is higher by roughly 2%.
"We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly," Boeing CEO Dave Calhoun said in a statement. "By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes – centered on safety and quality.
Under the agreement, Spirit shareholders will a certain amount of Boeing shares for each SPR share they currently own. The amount will range between 0.18 and 0.25 BA share for each Spirit share and will be calculated based on Boeing's volume-weighted average price (VWAP) over a specified time frame following the closing. If you are a Spirit shareholder, you can check with your broker for details.
In addition, Boeing said that its primary competitor Airbus has entered into an agreement with Spirit to acquire assets in Northern Ireland, Scotland and Malaysia to handle certain commercial work packages that Spirit currently performs for Airbus.
The transaction is subject to approval by Spirit shareholders, regulatory clearance and other closing conditions, Boeing said. If all goes as planned, the transaction is expected to close in mid-2025.
The deal comes about six months after a January 5 incident in which a Boeing Max 9 had a door detach while in flight, as Kiplinger previously reported.
Is Boeing stock a buy, sell or hold?
Even though Boeing is one of the worst Dow Jones stocks this year, Wall Street is bullish on the aerospace company. According to S&P Global Market Intelligence, the average analyst target price for BA stock is $218.08, representing implied upside of nearly 20% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm UBS is one of the more bullish outfits on the blue chip stock with a Buy rating and $240 price target.
The combination of the two aerospace firms "is a necessary step for a range of stakeholders to gain confidence in MAX quality and safety improvement," said UBS Global Research analyst Gavin Parsons in a recent. "Multiple industry participants we have spoken to believe this combination would improve quality control for Boeing, particularly on the 737 program for which SPR is one of the key suppliers. A combined entity should provide BA with better oversight of SPR processes and help reduce traveled work."
UBS' $240 price target represents implied upside of roughly 30% to current levels.
