Written by Mike Stone and Alison Lambert
WASHINGTON (Reuters) – Boeing Co agreed on Sunday to acquire Spirit AeroSystems for more than $4 billion, two people familiar with the matter said, ending months of talks on a deal that the U.S. planemaker hopes will help ease a mounting safety crisis.
Boeing (NYSE:) will pay $37.25 per share for Spirit Aero, in an all-stock deal, the two people said. They added that the boards of directors of Boeing and Spirit met on Sunday and agreed to the terms, and a formal announcement is likely to be made early Monday.
Spirit is valued at about $4.7 billion, according to one source.
The deal, which is subject to regulatory approvals, will result in the breakup of Spirit, with some of the Kansas-based company’s assets moving to French planemaker Airbus.
Airbus, Spirit and Boeing declined to comment.
Boeing is trying to overcome a year of difficulties sparked by a door seal on a new 737 MAX 9 that exploded in mid-air on Jan. 5, exposing a myriad of safety and quality problems. These issues have led to a significant production slowdown at Boeing – impacting the global commercial aviation industry.
Spirit, the door seal maker, spun off from Boeing in 2005 in one of a series of moves that critics say were emblematic of a focus on cost-cutting at the expense of quality.
Boeing made the decision to buy back Spirit aircraft following the January 5 accident on an Alaska Airlines flight, as part of efforts to fix safety problems and bolster its production line.
Boeing had previously discussed paying $35.50 a share in cash for Spirit, but that amount was raised to $37.25 when the agreement switched to stock, one of the sources said.
Terms of a parallel deal for Spirit to sell its Europe-focused operations to Airbus were not immediately clear.
The two deals are scheduled to be announced early Monday morning, people familiar with the matter said. The twin moves represent a transatlantic breakup of the world’s largest independent aerostructures maker, which has expanded into making parts for Airbus and others since it split from Boeing nearly two decades ago.
Production ceiling
Buying Spirit Aero wouldn’t immediately solve Boeing’s problems.
Following the door-blocking incident in January, the Federal Aviation Administration imposed a cap on production of Boeing’s best-selling MAX jets.
The US Justice Department will bring criminal charges against Boeing over two fatal accidents and will require the plane maker to plead guilty or face prosecution, Reuters news agency said on Sunday.
The iconic American company has been losing market share to Airbus for years, and is still dealing with the aftermath of twin crashes that killed nearly 350 people and led to the grounding of the 737 MAX.
The incidents led to the appointment of current CEO Dave Calhoun, who was brought in to fix the problems at the manufacturer, but will leave later this year with the company under greater regulatory scrutiny and with a badly damaged reputation.
On June 18, US senators harshly criticized Calhoun for the planemaker’s safety issues and repeatedly asked him about his salary. Some airlines have expressed frustration with Boeing both publicly and privately over delivery delays and ongoing problems the company faces.
Boeing recently submitted a comprehensive plan to the FAA addressing “systemic quality control issues” at the company.
