Honeywell Aerospace to Sell Consumables Business

June 9, 2008
Division sold to B/E Aerospace, long-term supply and license agreements will continue.

Honeywell Aerospace announced today that it signed a definitive agreement to sell its Consumables Solutions business to B/E Aerospace for $1.05 billion, consisting of at least $800 million in cash and the remainder in shares of B/E common stock. The transaction is expected to close in the third quarter subject to regulatory approval.

The business served as a global distributor of aerospace fasteners and hardware, and provides custom logistics services to original equipment manufacturers, airlines, repair shops, flight service centers and distributors, generating 2007 revenues of $524 million.

Rob Gillette, Honeywell Aerospace president and CEO said that while Consumables Solutions is a growing business, it no longer fits with the company's strategic focus on more advanced technologies for the entire aircraft.

"B/E Aerospaces focus on the distribution of commodities makes this business a better place for Consumables Solutions growth over the long-term," sid Gillette. "We look forward to working with B/E Aerospace under long-term supply and license agreements.

As part of the transaction B/E Aerospace will enter into a 30-year contract to become Honeywells exclusive licensee with respect to the sale of proprietary fasteners, seals, gaskets and electrical components to the global aerospace industry. B/E Aerospace will also become the exclusive supplier of such consumable products, as well as standard fasteners and consumables to support Honeywells internal manufacturing needs.

Amin J. Khoury, chairman and CEO of B/E Aerospace, said the combination of the two businesses will create a leading global distributor and value-added supply chain manager of aerospace hardware and other consumable products from locations in all key geographic markets worldwide.

The combined company will serve as a distributor for every major aerospace fastener manufacturer in the world, Khoury added. In addition, the significant product line expansion and operating synergies created by the combination will enhance our ability to serve our customers and create significant value for our shareholders.

The inventory investment required convert the business to the B/E Aerospace model is expected to be approximately $200 million over a three-year period. Integration and cash consolidation costs are expected to be approximately $15 million to $20 million.

We have a rigorous integration planning process underway and expect to assemble a fully staffed integration team consisting of key members of both organizations within 15 days, said Khoury. Both [companies] have excellent managerial, sales, procurement, IT and logistics personnel. We will be retaining the best personnel from both organizations, and we welcome the many [Honeywell] personnel who will be joining B/E Aerospace.

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