Boeing Aims to Reacquire Spirit AeroSystems with $35 Per Share Offer Amid Contract Complications

Boeing (NYSE: BA) has extended an offer to acquire Spirit AeroSystems Holdings (NYSE: SPR), valuing the pivotal aviation supplier at $35 per share, according to a report by Bloomberg News. The proposed transaction, primarily financed through stock, presents an attractive 6% premium over Spirit Aero's closing price of $33.07 as of Monday. It offers an impressive 22.4% rise from its February 29 closing price, just before Boeing’s acquisition discussions were unveiled.

Initially designed as an all-cash deal, Boeing pivoted to a stock-based purchase but may still include a smaller cash component. Although negotiations are ongoing, insiders predict that the deal's announcement is imminent. Adopting a diplomatic stance, Spirit AeroSystems commented on their unwavering commitment to delivering top-tier products to clients, while Boeing has yet to issue a formal response to queries.

Boeing's intentions to reacquire the Wichita, Kansas-based supplier—originally spun off in 2005—stem from a desire to solidify a crucial segment of its supply chain, particularly following the mid-air malfunction of a new 737 MAX in January. By bringing Spirit AeroSystems back into its fold, Boeing aims to ensure higher safety standards and product quality, having previously criticized the supplier for delivering incomplete or defective parts.

However, negotiations have encountered complications, notably due to Spirit's contracts with Airbus. The European aerospace giant has expressed concerns and is poised to obstruct any acquisition enabling Boeing to produce components for its new models. Consequently, the deal stipulates that Spirit AeroSystems should divest certain manufacturing plants to Airbus to alleviate these concerns. Bloomberg also indicated that Boeing and Airbus agreed to divide Spirit's operations.

Adding a layer of financial complexity, Spirit AeroSystems reported a substantial net loss of $617 million and a cash burn of $444 million in Q1, significantly exceeding analysts' expectations.