Last-Minute Twist: Boeing Offers All-Stock Deal To Acquire Spirit AeroSystems 

Shares of Spirit AeroSystems Holdings were lower in premarket trading in New York after Bloomberg reported that Boeing changed its proposed funding to acquire the parts maker from an all-cash deal to an all-stock deal. 

Sources say Boeing switched its proposed funding from an all-cash offer in the final innings of several months of negotiations. The deal now values the supplier at $35 a share, or about a 22% premium, versus the closing price on Feb. 29, one day before the takeover was made public. 

The Wall Street Journal first reported the move to an all-stock deal on Monday evening. The deal means Boeing will pay more than $4 billion for two-thirds of Spirit’s business.

Under the terms of the agreement, Spirit will divest its operations that manufacture components for rival Airbus, which account for one-fifth of the parts maker’s revenue. Spirit produces Airbus parts at its facilities in North Carolina and Belfast, Northern Ireland, and also supplies parts to defense firms.

Amid a cash crunch, ongoing investigations, and throttled plane production, people familiar with the talks told Bloomberg that Boeing’s capitalization changes for the deal could alleviate some pressure.

Boeing is on pace to burn through about $8 billion in cash during the first half of 2024 as it slows work in its factory to retrain mechanics and address quality lapses. In late April, the company sold more than $10 billion in bonds to help fund operations, bringing its total debt load to $58 billion. -Bloomberg

The people noted that the last-minute twist in capitalization should not be a ‘deal-killer’; instead, more due diligence will be needed and should expect a ‘three-way transaction within a matter of days.’ 

The acquisition of Spirit by Boeing marks a significant shift in the planemaker’s strategy, bringing fuselage manufacturing in-house. This move is expected to improve the quality of manufacturing, a crucial step needed amid ongoing investigations into mid-air mishaps and whistleblowers that warn about quality issues. 

In markets, Spirit shares were down 4% in premarket trading…

…barely back up to pre-pandemic levels…

Meanwhile, Boeing shares are down 31% on the year. 

Last month, Boeing Chief Financial Officer Brian West said the company was exploring all payment options to preserve its investment grade rating—including cash.