TransDigm Group Inc. (TDG) announced acquisition of substantially all the assets of Dukes, Inc. and GST Industries, Inc. (“Dukes”) for approximately $96 million in cash, plus the possibility of future payments up to a total of $60 million over four years based on the achievement of certain growth targets that are well above anticipated industry growth.

Dukes, Inc., headquartered in Northridge, CA, and its subsidiary, GST Industries located in Mesa, AZ, are both suppliers of proprietary, highly engineered components primarily to the business jet, regional jet, and military aerospace markets, along with commercial and military helicopter markets.

Dukes has primarily designed and manufactured highly engineered valves, while also producing certain pumps, solenoids and related components for over half a century. The majority of the company’s revenues are business-jet related with significant content on the Cessna family of jets and Hawker Beechcraft Premier and 400XP, as well as Bombardier business and regional jets, Bell 206/407/412/429 and military platforms such as the F-16, F-18, C-130, T-50, and AH-1Z/UH-1Y. Major customers include Cessna, Honeywell, Bombardier, Hawker Beechcraft, Lockheed Martin and Bell.

AeroControlex Group, Inc, a business division of TransDigm Group, designs and manufactures highly engineered pumps, electro-mechanical valves, valve manifolds and mechanical controls that meet the rigorous requirements of the aerospace industry. AeroControlex merges a progressive approach with over 50 years of aerospace experience to identify and engineer value-added, cost effective, productive solutions for its customers. Dukes is likely to be integrated into this group.

TransDigm Group Incorporated, through its wholly-owned subsidiaries, is a leading global designer, producer and supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service today. Its major competitors are Goodrich Corp. (GR), Honeywell International Inc. (HON) and United Technologies Corp. (UTX).

We currently have a Neutral recommendation on TDG.

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